Pankaj Chaudhary, the Minister of Finance of New Delhi, on August 3rd stated that the Enforcement Department has imposed money laundering allegations on WazirX and is about to inspect the platform for making illegal transactions of Rs 2,790 crores.
The ED will investigate WazirX for two different cases under FEMA (Foreign Exchange Management Act of 1999), as stated by Chaudhary in a written statement informing the Rajya Sabha.
The Finance Minister of State stated that information from the current investigation reveals that WazirX, the crypto-exchange platform, has been operated by Zanmai Labs Pvt. Ltd. in the country using the infrastructure of Binance based in the Cayman Islands.
All the transactions between the two platforms—Binance and WazirX—are mysteriously cloaked, and no records are to be found on any of the blockchain platforms, said Pankaj.
The investigation has revealed that the Indian cryptocurrency exchange Wazirx, was using the walled infrastructure of Cayman Island-based exchange BINANCE.
– Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary pic.twitter.com/IEXFC69ueR
— Crypto India 🔑 (@CryptooIndia) August 3, 2022
ED’s Allegations and Cases Filed Against WazirX
Under FEMA provisions, the Enforcement Department has issued an SCN (Show Cause Notice) to WazirX for permitting the remittance of outward crypto assets worth no less than Rs. 2790 crores transacted under unknown wallets.
In another case, it was found that WazirX has allowed several requests from foreign users to convert one cryptocurrency into another through its platform while using transfer requests from some third-party exchanges, including Binance and FTX.
In order to prevent any regulatory arbitrage on NFTs and cryptocurrency, international collaboration is a must as blockchain technology is deemed borderless and decentralized, said Chaudhary.
He further stated that imposing any legislation or ban on cryptocurrency trading cannot be done until and unless there is cooperation from all across the globe. Understanding the benefits and risks associated with digital assets and the evolution of standards and taxonomy is the need of the hour.