As per ED, users of WazirX received cryptocurrency worth Rs 880 crore via its pool account from Binance accounts and transferred out cryptocurrency worth Rs 1,400 crore to Binance accounts during its probe
Manoj Sharma | June 11, 2021 | Updated 15:05 IST
Users of India’s biggest crypto exchange WazirX have been a harried lot as the Enforcement Directorate (ED) issued a show-cause notice to the Mumbai-based firm for transactions involving cryptocurrency worth Rs 2,790.74 crore. The company as well as its directors, Nischal Shetty and Sameer Hanuman Mhatre, received an ED notice under the Foreign Exchange Management Act (FEMA).
ED has issued Show Cause Notice to WazirX Crypto-currency Exchange for contravention of FEMA, 1999 for transactions involving crypto-currencies worth Rs. 2790.74 Crore.
— ED (@dir_ed) June 11, 2021
A user sought to clarify from the company directors as to what implication the current ED probe will have on investors. “@NischalShetty @WazirXIndia what implications will this have on the investors?? Our hard-earned money is invested through your app…need clarification on this.”
— Surabhi Baksi (@SurabhiBaksi) June 11, 2021
Another one said: “Bigger question – if our investment and funds are safe with the crypto exchanges operating in India. Should we continue trading or wait for further clarification from government.”
Bigger question – if our investment and funds are safe with the crypto exchanges operating in India. Should we continue trading or wait for further clarification from government. @CoinDCX@NischalShetty@WazirXIndia@CoinSwitchKuber@bitbns@gauravdahakehttps://t.co/fPaiV0yTws
— chaitanya agarwal (@chaitanya353) June 11, 2021
A user said the ED should start a probe against WazirX to check its records of Shiba coins. Another user flagged the ED report saying “Chinese nationals used WazirX to launder gambling proceeds worth Rs57 crore through USDT.”
A user requested the company directors to explain it to its users. “I can’t even think of this but it’s true. Request you to please address the community and all #wrx holders,” he said.
Being India’s largest crypto exchange, WazirX claims to have 2 million users on its platform.
According to ED, users of WazirX have received cryptocurrency worth Rs 880 crore via its pool account from Binance accounts and transferred out cryptocurrency worth Rs 1,400 crore to Binance accounts during the period under investigation. The ED is also probing the allegations of money laundering by Chinese nationals who allegedly laundered Rs 57 crore by converting money into digital currency Tether (USDT) and further to Binance accounts.
“WazirX did not collect the requisite documents in clear violation of the basic mandatory Anti Money Laundering (AML) and Combating of Financing of Terrorism (CFT) precaution norms and FEMA guidelines,” ED officials said.
The cryptocurrency exchange allows a range of transitions including the exchange of cryptocurrency with rupees and vice-versa, person-to-person transactions, and transfer to crypto held in its pool accounts to wallets of other exchanges. These wallets can be held by foreigners in foreign locations.