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ED publishes notice to cryptocurrency exchange WazirX on transactions of Rs 2790 crore

By on June 11, 2021 0

In a statement, WazirX said it complies with all applicable laws and will cooperate with the investigation.

The Law Enforcement Branch issued a show cause notice to the WazirX crypto exchange for violating the Foreign Exchange Management Act 1999 (FEMA). These are transactions involving cryptocurrencies valued at Rs 2,790.74 crore, the Law Enforcement Directorate said. In a statement, the chief executive said he issued the notice of justification to its directors, CEO Nischal Shetty and Sameer Hanuman Mhatre. WazirX was acquired by Binance, a cryptocurrency exchange domiciled in the Cayman Islands in 2019.

The Enforcement Branch said it opened the FEMA investigation “based on the ongoing money laundering investigation into illegal Chinese-owned online betting apps.”

He said the accused Chinese nationals laundered around 57 crore rupees, which were proceeds of crime, by transferring the rupee deposits to cryptocurrency ties and then transferring them to Binance wallets, which he said , were “based on instructions received from abroad”.

The ED described the transactions it said were authorized by WazirX, and said the exchange does not collect the required documents, stating that this is in violation of the Mandatory Anti-Money Laundering (AML) Precaution. and Combating Financing (CFT) FEMA Standards and Directives.

“During the period under investigation, WazirX users through its pool account, received incoming cryptocurrencies worth Rs 880 crore from Binance accounts and transferred cryptocurrencies worth Rs 1400 crore to Binance accounts. None of these transactions are available on the blockchain for audit / investigation, ”he said.

“It was found that WazirX customers could transfer ‘valuable’ cryptocurrencies to anyone, regardless of their location and without any proper documentation, making it a safe haven for users looking money laundering / other illegitimate activities, ”he added.

Recently, the Reserve Bank of India called on banks to be cautious about cryptocurrencies and asked banks to implement customer due diligence processes necessary “to know your customer.” (KYC), fight against money laundering (AML), fight against the financing of terrorism (CFT). ) and the obligations of regulated entities under the Prevention of Money Laundering Act (PMLA), 2002, in addition to ensuring compliance with the relevant provisions of the Foreign Exchange Management Act (FEMA) for shipments of funds abroad ”.

Recently, RBI Governor Shaktikanta Das made it clear that the central bank’s view on cryptocurrencies remains unchanged and that he continues to have “major concerns.”

In a statement, WazirX said it “has not yet received a show cause notice from Enforcement Branch, as mentioned in media reports. WazirX is in compliance with all applicable laws. We go above and beyond our legal obligations by following the Know Your Customer (KYC) and Anti Money Laundering (AML) processes and have always provided information to law enforcement authorities whenever necessary. able to trace all users on our platform with official ID information.If we receive any formal communication or notice from the emergency service, we will fully cooperate with the investigation.