A notice of inquiry/investigation has been sent to India’s biggest crypto trading platform, WazirX, by the Directorate of Enforcement. Under the notice, an investigation has been initiated against WazirX over the allegation of WazirX’s involvement in the money laundering dispute with Chinese apps which facilitate online betting.
A Show Cause Notice has been served upon India’s biggest crypto trading platform, WazirX, by the Directorate of Enforcement. The notice was addressed to Nischal Shetty and Sameer Mhatre, WazirX’s CEO and co-founder respectively. The Director is an independent authority working under the Indian Government as an intelligence agency.
The Show Cause Notice was served upon the company and its officials under the Indian Foreign Exchange Management Act. The company along with officials have been asked to show cause with regard to a transaction consisting of US$ 382 Million. It was noted in the Notice that the Directorate had completed its initial probe with regard to the money laundering dispute. The dispute involved using Chinese applications for placing bets in illegal games hosted by some Chinese nationals.
The Directorate told WazirX that the findings of the investigation revealed that INR 57 Crores were looted by Chinese fraudsters. Upon receiving of funds, the criminals then transferred the national currency into USDT and then moved the funds into Binance.
An allegation against WazirX has been raised by Directorate that Binance had in fact transferred huge funds to WazirX’s customers. It noted that at least US$ 382 Million came in and out from WazirX to Binance and from Binance to WazirX. The authority noted further that not a single transaction involving this huge sum of money was neither inspected nor audited. It raises suspicion as WazirX is allowing its customers to transfer funds to anyone without knowing who is at the receiver’s end. In addition, there is a lack of proper documentation for sending money abroad, claimed the Directorate of Enforcement.
The authority also raised an allegation that such practices encourage people to take part in money laundering. Non-collection of essential documents is an act that is against international policies such as Anti-Money Laundering and CFT.
In response to the Show Cause Notice, Shetty informed on Twitter that he will challenge the notice before an appropriate forum. However, he clarified that WazirX is lawfully conducting its business of crypto trading. While doing so, it is made sure that all compliance requirements are fully met and implemented upon, said Shetty.
He also claimed that his crypto trading platform follows the policies of CFT, AML as well as KYC. The Directorate is misguided in alleging that WazirX was involved in any money laundering. He also promised to lend full support and cooperation to the Director for the completion of the investigation. Shetty clarified further that WazirX and its official reserve the right to take legal action against allegations raised by the Directorate.
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