India: Bank accounts of WazirX unfrozen by Enforcement Directorate

Indian cryptocurrency trading platform WazirX revealed today that the Enforcement Directorate (ED) has unfrozen her bank accounts following its investigation. It is after almost a month that the stock exchange would resume its banking operations.

“After an in-depth internal investigation, WazirX observed that most of the users whose information was sought by ED had already been identified as suspicious by WazirX internally and had been blocked in 2020-2021,” the statement said.

An ongoing investigation

It was early August 2022 that the ED raid the stock exchange office and froze its assets worth Rs 64.67 crore. In doing so, he accused WazirX of helping instant loan platforms to launder money through crypto-asset trading.

WazirX soon issued one statement then claiming that the exchange is cooperating with authorities and responding to all inquiries. It added that it remains committed to a zero-tolerance policy against any illegal activities using the stock market.

In his statement, WazirX informed the community that ED was investigating 16 financial technology and instant loan companies. Some of them had used his exchange for their activities.

In a statement, E.D he claimed that many Chinese companies could not obtain licenses to operate their lending business in India. These companies entered into MoUs with Indian stock exchanges to operate in the country.

The ED also said that members of WazirX were giving contradictory and ambiguous answers to evade surveillance which led to action by the authorities.

WazirX is not the only cryptocurrency exchange in India facing investigation. At the end of August, E.D raid five facilities of another Indian crypto exchange – Kuber Coin Switch. TThe residences of its CEO and directors were also raided.

The Indian watchdog has been actively investigating money laundering and other fraudulent crypto-activities in recent times.

Contradictions and more?

The moment the exchange was raided by the ED, Changpeng Zhao, CEO of Binance clarified on Twitter that Binance does not own any equity in Zanmai Labs, the entity that operates WazirX. He added that although he had published a blog in 2019 announcing the acquisition of WazirX, the transaction was never completed.

Nischal Shetty, CEO of WazirX, however, disputed Zhao’s statements on Twitter, stating that “WazirX was acquired by Binance.”

In the meantime, Binance has removed the off-chain fund transfer channel between WazirX and Binance.

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