ED investigating money laundering of Rs 2,790 crore against crypto exchange WazirX

Last month, the Enforcement Directorate (ED) sent summons to some crypto exchanges. The summons was issued for allegedly violating the rules of money laundering and foreign exchange. The exchanges whose names appeared included CoinDCX, WazirX and Coinswitch Kuber. Now Minister of State for Finance Pankaj Choudhary has said that the ED is probing the alleged money laundering of Rs 2,790 crore through crypto exchange WazirX. In a written reply to the Rajya Sabha, he said that the ED is probing two cases related to cryptocurrency against WazirX under the provisions of the Foreign Exchange Management Act 1999 (FEMA).

He said that the investigation conducted so far in one case has revealed that Wazirx, a crypto exchange platform operated by Janmai Labs Pvt Ltd in India, was using the infrastructure of Cayman Islands-based exchange Binance. The investigation found that not all crypto transactions between these two exchanges were being recorded on the blockchain and remained secret.

He said that a show cause notice (SCN) has been issued against WazirX under the provisions of FEMA.

Apart from this, in another case, it has been learned that Indian exchange WazirX has allowed the conversion of one crypto to another on its platform on the request of foreign users as well as using transfers from third party exchanges like FTX, Binance. Responding to another question, Choudhary said that cryptocurrencies and non-fungible tokens (NFTs) are borderless by definition and international cooperation is needed to regulate them. He said that any law to regulate or ban trade in the region can be effective only after international cooperation.

When the summons came to the fore last month, a WazirX spokesperson had said that the matter was pending with the Karnataka High Court, where the company and its directors filed a writ and the court passed an interim order. The central government is in no mood to give any relief to the crypto industry in India. Taxes are being levied on crypto like betting and lottery gains. For the past several months, the sector has been trying to recover from the downturn.

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