Indian Law Enforcement Charges WazirX Exchange With Assisting in the Laundering of $130 Million

The Enforcement Directorate (ED), India's financial crime enforcement agency, is investigating cryptocurrency exchanges accused of processing transactions that transported more than 10 billion rupees, or nearly $130 million, from organizations under investigation to worldwide wallets.

According to an official who talked to The Economic Times, at least ten crypto exchanges are allegedly implicated, and the bank accounts of exchange WazirX have been suspended, the newspaper stated.

Companies under investigation in a case involving rapid loans allegedly conducted transactions of up to 1 billion rupees, or $1.3 million, in the names of people with no relation to the money.

These businesses were frequently linked to China. Despite the fact that Know Your Customer/Anti-Money Laundering (KYC/AML) protocols revealed that the transactions were suspicious, the ED said that no increased due diligence was done and no suspicious transaction reports were lodged.

Last Monday, the ED blocked WazirX bank accounts containing around 647 million rupees ($8.1 million), alleging that the exchange supported approximately 16 fintech companies under investigation for money laundering.

WazirX issued a comment on its blog on Tuesday "on behalf of Zanmai Labs Pvt. Ltd," which it said works with WazirX and Binance, stating that all users are subject to KYC/AML processes and the exchange fully cooperates with law authorities.

"We are able to supply the KYC details of the relevant user for every transaction," the blog post stated.

The allegations leveled against WazirX have focused attention on its murky ownership structure and the role Binance plays in it.

Binance CEO Changpeng Zhao (CZ) said on August 5 that his business did not complete the previously announced acquisition of WazirX.

CZ noted the following day, in an interaction with WazirX cofounder Nischal Shetty, "we asked for transference of WazirX system source code, deployment, and operations as recently as February this year."

WazirX declined to do so. Binance has NO control over their systems."

This is not the first time WazirX has been accused of failing to implement proper anti-money laundering safeguards.

The ED charged WazirX in 2021 with money laundering unlawful online gambling earnings, also with a Chinese connection.

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