Binance-owned WazirX exchange is under investigation in India for alleged violations of foreign exchange regulations.
India’s financial crime-fighting agency announced earlier today that it is investigating cryptocurrency exchange WazirX for suspected violation of foreign exchange regulations. The regulatory agency is investigating the Binance-owned crypto exchange for transactions worth 27.90 billion rupees ($381.93 million).
In a statement the federal Enforcement Directorate said it began looking at WazirX when it was investigating a money laundering case involving Chinese-owned illegal online betting applications. The agency added that it encountered that some of the funds were converted to cryptocurrencies on the WazirX exchange platform.
“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 added.
At the moment, WazirX is yet to receive any notification from the agencies and maintains that it is in compliance with the financial regulations in India. Nischal Shetty, CEO and Founder, WazirX, stated that “We go beyond our legal obligations by following Know Your Customer (KYC) and AML processes and have always provided information to law enforcement authorities whenever required.”
The regulatory agency complained that some WazirX users could transfer funds without proper documentation, making the platform a safe haven for people looking to launder funds. The ED cited a transaction worth 22.80 billion rupees ($311 million) which wasn’t recorded on the blockchain. Hence, ensuring that it is impossible to audit the transaction.
However, WazirX maintains that it traces all the users on its platform. “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’ll fully cooperate in the investigation,” Shetty said.
The Indian cryptocurrency market is a complicated one. Cryptocurrency trading is allowed, but the government is looking for ways to ensure that is not the case. The Reserve Bank of India has warned banks and other financial institutions to desist from supporting crypto-related businesses.