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Indian authorities freeze $8.1M in WazirX funds as part of AML investigation



India’s Directorate of Enforcement, or ED, has actually revealed it froze approximately $8.1 million in funds and performed a search linked to cryptocurrency exchange WazirX as part of an investigation into instantaneous individual loan scams.

In a Friday statement, the Directorate of Enforcement declared WazirX helped with deals by unnamed fintech companies “to purchase crypto assets and then launder them abroad” as part of a plan including Chinese-backed business preventing India’s licensing policies. In its investigation, the ED stated it bought WazirX savings account consisting of 646.7 million Indian rupees — approximately $8.1 million at the time of publication — frozen and performed a search linked to co-founder Sameer Mhatre.

According to the regulator, the investigation was still continuous. However, the ED declared the crypto exchange had “lax KYC norms” and “loose regulatory control” of deals in between WazirX and Binance, and did not record info required to confirm from where funds were pertaining to acquire crypto utilized in the supposed scams.

“Despite giving repeated opportunities, WazirX failed to give the crypto transactions of the suspect fintech APP companies and reveal the KYC of the wallets,” stated the ED, including:

“WazirX is not able to give any account for the missing crypto assets. It has made no efforts to trace these crypto assets. By encouraging obscurity and having lax AML norms, it has actively assisted around 16 accused fintech companies in laundering the proceeds of crime using the crypto route.”

In a Friday Twitter thread, Binance CEO Changpeng Zhao said the company did “not own any equity in Zanmai Labs, the entity operating WazirX and established by the original founders.” He included that “Binance only provides wallet services for WazirX as a tech solution,” while WazirX was accountable for KYC and other operations on the exchange. 

Related: Indian regulator probes crypto exchange for declared forex law infractions

With the exodus of lots of crypto companies in China following a regulative crackdown, lots of business have actually supposedly relied on the marketplaces in India. The ED reported that some fintech companies “backed by Chinese funds” had “piggybacked” on Indian business with defunct non-banking monetary business licences to provide loaning services to homeowners.

The ED took comparable action versus WazirX in June 2021, purchasing the crypto exchange to justify associated to deals of a money-laundering investigation into prohibited online wagering applications including Chinese nationals. WazirX director Nischal Shetty said at the time that the exchange went “beyond [its] 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.”

Cointelegraph connected to WazirX, however did not get an action at the time of publication.