WazirX Money Laundering Case: ED Issues Notice For Crypto Transactions Worth Rs 2,790 Cr

New Delhi: The famous cryptocurrency exchange WazirX, along with its directors Nischal Shetty and Sammer Hanuman Mhatre experienced a big blow on Friday in the form of a show cause notice by the Information Directorate (ED), under Foreign Exchange Management Act, 1999, (FEMA). The notice was issue regarding transactions involving cryptocurrency worth Rs 2,790.74 crore. 

The official twitter handle of ED on Friday confirmed, “ED has issued Show Cause Notice to WazirX Crypto-currency Exchange for contravention of FEMA, 1999 for transactions involving crypto-currencies worth Rs. 2790.74 Crore”.  

According to an ED statement, it initiated FEMA investigation based on the ongoing money-laundering investigation into Chinese-owned illegal online betting applications. 

WazirX is an India-based cryptocurrency exchange which allows its customers to trade in digital currencies. It allows a range of transactions with cryptocurrencies like exchange of cryptcurrencies with rupee and vice-versa, transfer/receipt of cryptocurrency held in its pool accounts to wallets of other exchanges which could be held by people living outside India in foreign locations. 

According to ED, it was in this period under investigation that, users of WazirX received cryptocurrency worth Rs 880 crore via its pool account from Binance accounts and transferred out cryptocurrency worth Rs 1,400 crore to Binance accounts. 

Binance account is an online exchange account where users can trade cryptocurrencies. They support many of the most traded cryptocurrencies and provide a crypto wallet for its traders, where they can store their electronic funds. 

The officials said that none of these transactions are available on the blockchain for any audit or investigation. “It was found that the WazirX Clients could transfer ‘valuable’ crypto-currencies 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 or other illegitimate activities,” added the officials.