The Enforcement Directorate (ED) on Friday said it was investigating WazirX, the country’s largest cryptocurrency exchange and its directors in connection with a Rs 2,790 crore ($382 million) money laundering case linked to some illegal Chinese online betting companies
WazirX - owned since 2019 by Binance, the world's largest digital currency exchange - began when the ED was looking into a money laundering case which involved Chinese owned illegal online betting applications, it said.
During the course of the investigation it was found that the laundered proceeds of crime worth approximately Rs 57 crore had been converted into cryptocurrencies using the WazirX platform, the ED statement said.
"WazirX does not collect the requisite documents in clear violation of the basic mandatory Anti Money Laundering (AML) and Combating of Financing of Terrorism (CFT) precaution norms and FEMA guidelines," the agency said.
Separately, other transactions worth Rs 2, 280 crore were not recorded on the blockchain platform for any audit or investigation. Users of WazirX could transfer funds without proper documentation making it a safe haven for those looking to launder money, the ED statement said.
WazirX is the country's largest cryptocurrency exchange with around five million users in India.
Assuring investors, Nischal Shetty, CEO WazirX said, "The funds are safe at WazirX and there is no need to worry for the funds."
He said the company is yet to receive any notice from the investigating agencies and is in compliance with all the applicable laws. "We go beyond our legal obligations by following Know Your Customer (KYC) and AML processes and have always provided information to law enforcement authorities whenever required," Shetty claimed.
"We are able to trace all users on our platform with official identity information. Should we receive a formal communication or notice from the ED, we'll fully cooperate in the investigation," Shetty added.
The investigation into suspected breach of foreign exchange regulations comes at a time when the Indian government is working on a new law to ban cryptocurrencies in the country. The RBI has also stated that cryptocurrencies such as bitcoins pose a high risk to the stability of the financial system and because of their non-transparent nature can be used for money laundering.