CHENNAI: Based on the ongoing money laundering investigation into Chinese owned illegal online betting applications, the Enforcement Directorate has issued a show-cause notice to Nischal Shetty and Sameer Mhatre, directors of Indian cryptocurrency exchange WazirX, for transaction of cryptocurrencies worth Rs 2,790.74 crore.
They have been issued show-cause notice under the provisions of FEMA and other rules.
In a press release, the ED said WazirX, which allows person-to-person transactions, exchange of cryptocurrency to INR and vice versa, does not collect the requisite documents in clear violation of basic mandatory Anti Money Laundering and Combat of Financing of Terrorism precaution norms and FEMA guidelines.
Based on its investigation, the ED said Chinese nationals had laundered proceeds worth Rs 57 crore by converting the INR deposits into the cryptocurrency called Tether and transferred the same to the wallets of another international cryptocurrency exchange called Binance app, based on instructions received from abroad.
And in the period of investigation, users of WazirX via its pool account, have received incoming cryptocurrency worth Rs 880 crore from Binance account and transferred out cryptocurrency worth of Rs 1400 crore to Binance accounts.
With lack of proper documentation, WazirX clients could transfer valuable cryptocurrency to any location and nationality.
Hence, the ED said, this made it a safe haven for users looking for money laundering and other illegitimate activities.
Responding to media reports, WaxirX’s CEO and co-founder Nischal Shetty said they were yet to receive any show-cause notice from the ED.
Shetty tweeted, “We are able to trace all users on our platform with official identity information.
Should we receive a formal communication or notice from the ED, we will fully cooperate in the investigation.” He also said they were in compliance with all applicable laws and went beyond their legal obligations by following Know Your Customer (KYC) and Anti Money Laundering (AML) processes and had always provided information to law enforcement authorities whenever required.