The Enforcement Directorate (ED) has issued a show cause notice to India's largest cryptocurrency exchange. The notice has been issued to the exchange for alleged violation of Foreign Exchange Management Act (FEMA) in transactions worth Rs 2,790 crore. This exchange WazirX was established in December 2017 by the company Janmai Labs Pvt Ltd. took place under. It was founded as a domestic cryptocurrency startup. Directors of the exchange Nischal Sethi and Hanuman Mahatre have also been named in the notice issued by the central probe agency after investigation.
The ED said that it came to know about this transaction of the company during its money laundering investigation related to a Chinese-owned illegal online betting app. The ED said that this show cause notice is in respect of transactions worth Rs 2,790.74 crore. The Enforcement Directorate said that the investigation revealed the fact that Chinese nationals laundered crime proceeds to the tune of Rs 57 crore by converting Indian rupee deposits into cryptocurrency Tether (USDT). It was later transferred to the Binance (registered exchange in the Cayman Islands) wallet.
Binance acquired WazirX in 2019. The ED alleges that WazirX allowed wide-ranging transactions through cryptocurrencies. WazirX allowed these without gathering necessary documents in violation of the Anti-Money Laundering Act and the Countering the Financing of Terrorism (CFT) as well as FEMA guidelines.
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