Directorate of Enforcement (ED) on Friday said that it has issued a show cause notice to Crypto-Currency Exchange Zanmai Labs Pvt Ltd (WazirX) and its Directors Nischal Shetty and Sameer Hanuman Mhatre under Foreign Exchange Management Act, 1999 for transactions involving crypto-currencies worth Rs 2790.74 crore.
ED initiated FEMA investigation on the basis of the ongoing money laundering investigation into Chinese owned illegal online betting applications.
“During the course of the investigation, it was found that the accused Chinese nationals had laundered proceeds of crime worth Rs 57 Crore approximately by converting the Indian Rupees deposited into Crypto-currency Tether (USDT) and then transferring the same to Binance (exchange registered in Cayman Islands) Wallets based on instructions received from abroad”, the probe agency officials said.
They also said that the WazirX allowed a wide range of transactions with Crypto-currencies(CCs) including exchange of CCs with INR and vice-versa, exchange of CCs,Person to Person (P2P) transactions, and even transfer or receipt of crypto-currency held in its pool accounts to wallets of other exchanges which could be held by foreigners in foreign locations.
“WazirX does not collect the requisite documents in clear violation of the basic mandatory Anti Money Laundering and Combating of Financing of Terrorism precaution norms and FEMA guidelines”, the ED said.