India freezes assets of Binance-linked crypto exchange WazirX over foreign exchange allegations

India freezes assets of Binance-linked crypto exchange WazirX over foreign exchange allegations

India freezes Binance-linked WazirX assets

India’s Financial Crimes Authority on Friday said it had frozen the assets of WazirX, which is linked to the world’s largest digital currency exchange Binance, as part of a suspected investigation violation of foreign exchange regulations.

The Federal Bureau of Enforcement (ED) said it had frozen assets worth 646.70 million rupees ($8.16 million).

A spokesperson for WazirX, one of the largest cryptocurrency exchanges in India, said: “We have fully cooperated with the Department of Enforcement for several days and have answered all their inquiries promptly. fully and transparently”.

“We disagree with the allegations in the ED press release. We are evaluating our next action plan.”

The agency said its actions are related to an investigation into the crypto exchange’s suspected role in assisting instant loan app companies to launder proceeds of crime by convert them into cryptocurrencies on its platform.

Searches were conducted against one of the directors of Zanmai Lab, which owns WazirX.

The ED says it is conducting money laundering investigations against several shadow banks and their fintech firms for violating central bank standards and engaging in pre-hunting lending practices. .

“While conducting a fund tracking investigation, the ED discovered that a large amount of funds were diverted by fintech companies to purchase crypto assets and then launder them abroad… were moved to WazirX exchange and crypto assets, so purchases were redirected to unknown foreign wallets,” it said in a release.

Many of the fintech companies that deal in these illegal lending activities are backed by Chinese funds, The investigative agency added.

The ED launched an investigation last year into WazirX on suspicion of violating foreign exchange regulations.

Binance CEO Changpeng Zhao tweeted on Friday that the company does not own a stake in Zanmai Labs.

“On November 21, 2019, Binance published a blog post stating that it had ‘acquired’ WazirX. This transaction was never completed. Binance has never – at any point – owned own any shares of Zanmai Labs,” Zhao tweeted.

Binance only provides wallet services to WazirX as a technology solution, he said.

In 2021, the ED looked into a money laundering case involving illegal Chinese-owned online betting apps.

During the investigation, the ED said that approximately Rs 570 million worth of laundered criminal proceeds were converted into cryptocurrency using the Binance platform.

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