The Enforcement Directorate (ED) 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 (FEMA) for transactions involving crypto-currencies worth Rs 2,790.74 crore related to Chinese online betting racket. The ED had initiated FEMA investigation on the basis of the ongoing money laundering investigation into Chinese owned illegal online betting mobile applications.
“During the course of the investigation, it was seen that the accused Chinese nationals had laundered proceeds of crime worth Rs 57 crore approximately by converting the Indian Rupee currency deposits 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 ED said in a statement.
WazirX allows wide range of transactions with crypto-currencies (CCs) including exchange of CCs with Indian Rupee (INR) and vice-versa, exchange of CCs, Person to Person (P2P) transactions, and even transfer/receipt of crypto-currency held in its pool accounts to wallets of other exchanges which could be held by foreigners in offshore locations, it said.
WazirX does not collect the requisite documents in clear violation of the basic mandatory Anti Money Laundering (AML) and Combating of Financing of Terrorism (CFT) precaution norms and FEMA guidelines, the agency alleged.
