The Enforcement Directorate has just recently, on Friday, June 11, issued a Show Cause Notice to the Indian crypto currency exchange- WazirX for a supposed violation of FEMA (Foreign Exchange Management Act), 1999. The accused violation involved crypto transactions of worth ₹2,790.74 crore.
The FEMA investigation instigated by the ED is based on the money laundering investigation of the illegal online Chinese betting app, which is currently in process, read the statement given out by the ED.
In a statement released by the ED, it said- ”During the course of the investigation, it was seen that the accused Chinese nationals had laundered proceeds of crime worth ₹57 Crore approximately by converting the INR deposits into Crypto-currency Tether (USDT) and then transferring the same to Binance (exchange registered in Cayman Islands) Wallets based on instructions received from abroad.”
WazirX is the biggest crypto currency exchange in the country. Registered under the name of Zanmai Labs Pvt Ltd., the company was launched in 2017 as a domestic crypto startup. The notice sent to the company by the ED mentions both- the founder and director Nischal Shetty and director- Hanuman Mhatre. Today, WazirX is owned by Binance after its acquisition in 2019.
In response to the reports and media, Shetty said- ”WazirX is yet to receive any show cause notice from the Enforcement Directorate as mentioned in today’s media reports. WazirX is in compliance with all applicable laws.”
”We go beyond our legal obligations by following Know Your Customer (KYC) and Anti Money Laundering (AML) processes and have always provided information to law enforcement authorities whenever required. 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. Should we receive a formal communication or notice from the ED, we’ll fully cooperate in the investigation, he further added in his statement.
Directorate of Enforcement is a specialized financial investigation association under the Department of Revenue, Ministry of Finance, Government of India, which enforces FEMA and PMLA. The Enforcement Directorate was established in the year 1956. The current Headquarter of the ED is situated at New Delhi.
Foreign Exchange Management Act,1999 (FEMA) is a Civil Law with officers empowered to conduct investigations into suspected contraventions of the Foreign Exchange Laws and Regulations, resolve, breach, and impose penalties on those charged to have contravened the law.