India launches money laundering probe against Binance unit for crypto transactions $381 million

Sputnik news agency and radio 10:02 GMT 11.06.2021


The action against WazirX was initiated days after the Reserve Bank of India (RBI) asked commercial banks to carry out the necessary customer due diligence process to curb the flow of illegal money, if any, into the virtual currency market. WazirX was acquired in 2019 by Binance, the world’s largest digital currency exchange.


India’s federal financial crime-fighting agency, Enforcement Directorate (ED), has issued a show-cause notice to WazirX and its directors, Nischal Shetty and Sameer Mhatre, under the Foreign Exchange Management Act (FEMA) 1999, for transactions involving cryptocurrencies worth $381 million.


The agency alleged that WazirX, one of country’s largest cryptocurrency exchanges, violated the FEMA rules by converting Indian rupee deposits into the cryptocurrency Tether and then transferred them to the Binance Wallet.


“It was found that the WazirX clients could transfer 'valuable' cryptocurrencies to any person irrespective of its location and nationality without any proper documentation whatsoever, making it a safe haven for users looking for money laundering/other illegitimate activities”, the ED added.


Meanwhile, WazirX has claimed that the firm is in compliance with all applicable laws.


“We go beyond our legal obligations by following Know Your Customer (KYC) and Anti Money Laundering (AML) processes and have always provided information to law enforcement authorities whenever required. We are able to trace all users on our platform with official identity information”, Nischal Shetty, CEO and founder, WazirX, told Sputnik, while underlining that the funds of investors are safe on the platform.


The Indian agency launched the investigation at a time when the Narendra Modi-led government is dithering over the introduction of a law that could ban cryptocurrencies in India.


The Indian parliament is expected to consider a bill prohibiting all private cryptocurrencies and allowing an official digital currency to be issued by the Reserve Bank of India. In 2018, the Reserve Bank of India curbed the use of and trade in virtual currencies, including bitcoin, which was later revoked by the Supreme Court in March 2020.