India freezes assets of cryptocurrency exchange WazirX
India's financial crime-fighting agency has frozen the assets of WazirX, linked to the world's largest digital currency exchange Binance, as part of its investigation into suspected violations of foreign exchange regulations.
A spokesman for WazirX, which is among the largest virtual currency exchanges in India, said the Federal Enforcement Directorate ED said assets were worth 646.70 million rupees $8.16 million and were fully cooperating with the Enforcement Directorate for several days.
We do not agree with the allegations in the ED press release. We are evaluating our plan of action. The agency said that it was involved in an investigation into the exchange's suspected role in helping instant loan app companies in laundering the proceeds of crime by converting them into cryptocurrencies on its platform.
One of the directors of Zanmai Lab, which is the company that owns WazirX, was searched for the job.
The ED said that it was conducting money-laundering investigations against several shadow banks and their fintech companies for violations of central bank norms and indulging in predatory lending practices.
While doing fund trail investigation, ED found large amounts of funds were diverted by the fintech companies to purchase assets and then launder them abroad. The maximum amount of funds was diverted to WazirX exchange and the assets have been diverted to unknown foreign wallets, it said in a release.
The investigation agency said that a lot of these companies dealing in illegal lending practices were backed by Chinese funds.
The ED launched a probe last year into WazirX for suspected violations of foreign exchange regulations.
On Friday, the company does not own shares in Zanmai Labs, according to the CEO of the company, Changpeng Zhao.
On 21 November 2019, Binance published a blog post that it had 'acquired' WazirX. This transaction was never completed. Zhao tweeted that Binance had never owned any shares of Zanmai Labs.
He said that Binance only provides wallet services for WazirX as a tech solution.
In 2021, the ED was looking into a money laundering case involving Chinese-owned illegal online betting applications.
The ED had said that the laundered proceeds of crime worth about 570 million rupees had been converted into cryptocurrencies using the Binance platform.