India freezes assets of Binance-linked WazirX


Representations of cryptocurrencies in this illustration were taken on January 24, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

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MUMBAI, Aug 5 (Reuters) – India’s financial crime agency said on Friday it had frozen the assets of WazirX, linked to the world’s largest digital currency exchange Binance, as part of its investigation into alleged violations of foreign exchange regulations .

The federal Enforcement Directorate (ED) said it had frozen assets worth 646.70 million rupees ($8.16 million).

“We have been fully cooperating with the Enforcement Directorate for several days and have responded to all their queries fully and transparently,” said a spokesperson for WazirX, which is among the largest virtual currency exchanges in India.

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“We do not agree with the allegations in the ED press release. We are evaluating our next plan of action.”

The agency said its action was related to an investigation into the crypto exchange’s alleged role in helping instant loan app companies launder the proceeds of crime by converting them into cryptocurrencies on its platform.

The searches were conducted on one of the directors of Zanmai Lab, which owns WazirX.

The ED said it is conducting money laundering investigations against several shadow banks and their fintech companies for violating central bank norms and indulging in predatory lending practices.

“While conducting fund trail investigation, ED found that large sums of funds were diverted from fintech companies to purchase crypto assets and then launder them abroad… maximum amount of funds were diverted to WazirX and crypto exchange assets, so purchases were diverted to unknown foreign wallets,” it said in a statement.

Many of these fintech companies engaged in illegal lending practices were backed by Chinese funds, the investigative agency added. (https://bit.ly/3zArOBV)

The ED started its investigation last year against WazirX for alleged violations of foreign exchange regulations.

Binance CEO Changpeng Zhao tweeted on Friday that the company does not own shares in Zanmai Labs. (https://bit.ly/3bt0Sw5)

“On November 21, 2019, Binance published a blog post that it had ‘acquired’ WazirX. This transaction was never completed. Binance has never – at any time – owned any shares of Zanmai Labs,” Zhao tweeted.

Binance only provides wallet services for WazirX as a technical solution, he said.

In 2021, the ED handled a money laundering case involving Chinese-owned illegal online betting apps. During the investigation, it was found that the laundered proceeds of crime worth about Rs 570 million were converted into cryptocurrencies using the Binance platform, the ED said. Read more

($1 = INR 79.2040)

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Reporting by Nupur Anand in Mumbai and Yuvraj Malik in Bengaluru; editing by Louise Heavens, Jason Neely, Vinay Dwivedi and Maju Samuel

Our standards: The Thomson Reuters Trust Principles.

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