ED freezes Rs 64.7 crore in bank accounts of crypto exchange WazirX

The Enforcement Directorate has searched one of the directors of Zanmai Lab Private Limited, owner of the popular cryptocurrency exchange WazirX. The financial investigation agency has issued an order to freeze his bank balances to the tune of Rs 64.67 crore.

The ED is conducting a money laundering investigation against several Indian Non-Bank Finance Company (NBFC) companies and their fintech partners for predatory lending practices in violation of RBI guidelines and through the use of telephone operators who they misuse personal data and use abusive language. to extort high interest rates from borrowers.

The agency said a number of Chinese-funded fintech firms were unable to obtain RBI’s NBFC license to conduct lending business, so they devised the MoU route with defunct NBFCs to take advantage of their license.

After the criminal investigation began, many of these fintech apps shut down and siphoned off the huge profits made from the previous modus operandi. While conducting a proof-of-funds investigation, the ED discovered that fintech companies siphoned off a large amount of funds to purchase crypto assets and then launder them abroad. These companies and virtual assets are untraceable at this time.

The financial investigation agency issued subpoenas to crypto exchanges. It is seen that the maximum amount of funds was diverted to the WazirX exchange and the crypto assets thus purchased were diverted to unknown foreign wallets, ED said.

The ED said: “Zanmai Labs Pvt Ltd, the company that owns WazirX Crypto Exchange, has created a network of agreements with Crowdfire Inc. USA, Binance (Cayman Islands), Zettai Pte Ltd Singapore, to hide ownership of the cryptography. exchange. Earlier, its Managing Director Mr. Nischal Shetty had claimed that WazirX is an Indian exchange that controls all crypto-crypto and inr-crypto transactions and has only one IP and a preferential deal with Binance.”

“But now, Zanmai claims that they are only involved in inr-crypto transactions, and all other transactions are done by Binance on WazirX. They are giving contradictory and ambiguous responses to evade the supervision of Indian regulatory agencies,” the central agency noted during the investigation.

WazirX runs on cloud-based software (@AWS Mumbai), all employees work from home, the registered office is a 2-chair co-working Wework space, and all crypto-crypto transactions are controlled by Binance {which again he has no office knowledge, any known employee and rarely responds to queries at [email protected]}.

Despite repeatedly providing opportunities, WazirX did not provide the crypto transactions of the shady fintech app companies and did not disclose the KYC of the wallets. Most transactions are also not recorded on the blockchain.

According to ED, WazirX reported that before July 2020, they did not even record the details of the bank account from which the funds were entering the exchange to buy crypto assets.

Due to the uncooperative position of the Director of the WazirX exchange, ED conducted a search operation under PMLA on August 3.

ED said: “Sameer Mhatre, director of WazirX, was found to have full remote access to the WazirX database, but despite that, he does not provide transaction details related to crypto assets, acquired with the proceeds of crime. of Instant Loan Application Fraud. Lax KYC rules, lax regulatory control of transactions between WazirX and Binance, lack of transaction registration on Blockchains to save costs, and lack of KYC registration of opposing wallets have ensured that WazirX cannot give any accounts for the missing crypto. active. It has made no effort to track these crypto assets.”

“By encouraging obscurity and having lax AML regulations, it has actively helped around 16 accused fintech companies to launder proceeds of crime using the crypto route. Therefore, the equivalent movable property to the extent of Rs. Rs 64.67 crore was frozen with WazirX under PMLA, 2002,” the central agency added.

Additional investigation is underway.

— ENDS —

Leave a Comment