ED investigates crypto exchange WazirX for money laundering of Rs 2,790 crore

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NEW DELHI: Minister of State for Finance Pankaj Chaudhary said on Tuesday that the Enforcement Directorate is investigating allegations of money laundering of Rs 2,790 crore through a crypto exchange WazirX.
The ED is investigating two cryptocurrency-related cases against WazirX under the provisions of the Foreign Exchange Management Act 1999 (FEMA), it said in a written response to the Rajya Sabha.
“In one of the cases, the investigation conducted so far revealed that an Indian crypto exchange platform, Wazirx, operated by Zanmai Labs Private Limited in India was using the walled infrastructure of the exchange. Cayman Islands-based BINANCE. Further, it was found that all crypto transactions between these 2 exchanges were not even recorded on the blockchains and hence shrouded in mystery,” he said.
As a result, she said, a show cause notice (SCN) was issued under FEMA provisions against WaxirX for authorizing the outward transfer of crypto assets worth Rs 2,790. crore to unknown wallets.
Moreover, in another instance, it is noticed that Indian exchanges i.e. WazirX has allowed the request of foreign users to convert one crypto to another on its own platform as well as using the transfer from third-party exchanges, namely FTX, BINANCE, etc., he said.
In response to another question, Chaudhary said that cryptocurrencies and non-fungible tokens (NFTs) are by definition borderless and require international collaboration to prevent regulatory arbitrage.
Therefore, any legislation to regulate or prohibit possession and trade in such a borderless sector can only be effective after significant international collaboration on risk-benefit assessment and evolution of taxonomy and common standards, he said.
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