ED searches WazirX firm, freezes bank balance

119
2
ED searches WazirX firm, freezes bank balance

The Enforcement Directorate ED has searched the premises of a director of Zanmai Lab - the company that runs popular criptocurrency exchange WazirX in Hyderabad and ordered a freeze on its bank balance of Rs 64.67 crore, officials said today.

This comes just days after the Minister of State for Finance Pankaj Chaudhary told Parliament that the ED is investigating two cases related to WazirX, for alleged violations of the Foreign Exchange Management Act.

The raids yesterday were conducted by Sameer Mhatre, a director of the company. He has complete remote access to the WazirX database, but he is not providing the details of the transactions. It's suspected that some Chinese-backed online financial companies or instant-loan apps have diverted their profits into buying criptocurrencies in order to launder money abroad. These included firms that were denied loan-business licences because they had misused personal data and threatened loan takers with abusive calls and extortion, according to ED officials. These companies had tied up with defunct firms to use their licences.

After the investigation began, they diverted their profits by busying assets and sending money abroad.

An ED note said that the maximum amount of funds was diverted to WazirX exchange and the assets that were purchased have been diverted to unknown foreign wallets. The agency says these companies and virtual assets are untraceable at the moment.

Investigators believe that Zanmai Labs, the company that owns WazirX, has created a network of agreements with companies in the US, Cayman Islands and Singapore. The intention is to obscure the ownership of the company's managing director, Nischal Shetty, who said that WazirX is an Indian exchange that only has a tie-up with the Cayman Islands-based exchange Binance.