India’s Enforcement Directorate (ED) has ordered the freezing of a WazirX bank account with Rs 64.67 crore (about $8.1 million) as part of a money laundering investigation, IndiaToday reported on August 5.
Several fintech companies used licenses of former NBCF?
The report revealed that several crypto exchanges and other private financial institutions in India were being investigated for money laundering practices.
The initial investigation focused on non-banking financial companies (NBCFs) over predatory lending practices that violated Reserve Bank of India guidelines.
However, the agency soon discovered that several fintech companies in the country that were unable to obtain licenses were using the licenses of former NBCFs to operate.
Investigations led most of these fintech companies to close their operations and spend their profits on buying crypto assets.
According to the regulator, WazirX received most of these funds, which have now been transferred to foreign wallets.
The financial regulator said that WazirX provided contradictory and ambiguous information throughout the investigation.
Zanmai Labs pvt ltd – The company that owns wazirx crypto exchange – has created a network of agreements with – crowdfire inc. Usa, binance (cayman islands), zettai pte ltd singapore – to hide the ownership of the crypto exchange.
No effort to recover the crypto assets in the investigation
Initially, WazirX said it controlled all Indian rupees to crypto transactions and crypto to crypto transactions on the exchange. But the company later changed its tune to say that it was only responsible for Indian rupees to crypto transactions, while Binance controlled everything else in its attempt to escape regulatory oversight.
ED continued that WazirX directors had not cooperated during investigations after several offers from the agency.
He said this lack of cooperation led to the investigation and discovery that the exchange had “lax KYC standards, loose regulatory oversight of transactions between WazirX and Binance, failure to record transactions on the blockchain to reduce costs, and failure to record KYC of opposing wallets.
The regulator added that the exchange had made no effort to recover the crypto assets involved in the investigation. For these reasons, its “mobiles in the measure of Rs 64.67 crore” have been frozen.
By encouraging obscurity and having lax aml norms, he actively helped about 16 accused fintech companies launder the proceeds of crime using the cryptographic route.