WazirX probe reveals ‘darker side’
A top government source said on Thursday that the Enforcement Directorate's investigation into money laundering by WazirX and the subsequent squabbling among its promoters revealed the 'darker side' of cryptocurrencies.
The source said that people should exercise caution in the absence of a regulation to govern cryptocurrencies and so-called exchanges trading in them.
The word caution is something that should be in the minds of people dealing with cryptocurrencies. The source said caution is necessary in the event of WazirX, people got to know many darker sides.
The Enforcement Directorate ED has been investigating money laundering allegations against WazirX.
The agency has frozen Rs 64.67 crore worth of bank deposits as part of an ongoing money laundering probe against some fraudulent mobile-based loan apps backed by Chinese funds.
Within a few days of the ED action, a public spat broke out between Binance CEO Changpeng Zhao and WazirX co-founder Nischal Shetty.
The Indian entity said it was looking into legal action against Binance and the CEO of the company distanced himself from the operations at WazirX exchange.
The Minister of State for Finance Pankaj Chaudhary said in Parliament that a show-cause notice was issued under the provisions of the Foreign Exchange Management Act FEMA against WazirX for allowing outward remittance of assets worth Rs 2,790 crore to unknown wallets.
In another case, he noticed that WazirX allowed foreign users to use transfers from third-party exchanges, namely FTX, Binance, etc., to convert one coin into another on its own platform.
The ED is investigating the case, and the WazirX episode has brought to fore a lot of issues, according to government sources.
India does not like cryptocurrencies, but levies a 30 per cent tax on income earned from such virtual assets.
Finance Minister Nirmala Sitharaman has been making a strong case for global regulation of cryptocurrencies to tackle the risks of money laundering and terror funding.
She suggested at the G 20 Ministerial Symposium on Tax and Development in Bali that G 20 should examine the feasibility of bringing non-financial assets likecryptocurrencies into the ambit of automatic exchange of information among nations to check tax evasion.