In a relief to crypto exchange WazirX, the enforcement directorate (ED) has unfrozen ₹370 crore in the bank accounts of the crypto unicorn, a month after freezing them. The ED's decision to unfreeze these accounts comes after receiving necessary details and documents related to the money laundering probe. The company claims it has no association with any of the alleged accused fintech and instant loan app entities, which appear to be the subject of the ED probe.
The premier probe agency is probing at least 10 crypto exchanges, including WazirX and CoinSwitch Kuber, in the case of alleged money laundering worth over ₹1,000 crore in India.
The ED had earlier accused Wazir of being involved in alleged money laundering and facilitating illegal entities to send money out of India, via the purchase and transfer of virtual crypto assets. The company says its internal in-depth probe has revealed that it had flagged most of the accounts whose information was sought by the ED as "suspicious". These accounts were blocked by WazirX in 2020-21, it claims.
"Due to the active cooperation extended by WazirX and active anti-money laundering (AML) checks that led to the blocking of suspicious accounts, the ED has unfrozen the bank accounts of WazirX," says the company statement.
WazirX is now in a position to continue its banking operations, as usual, it adds. Fortune India had recently reported that WazirX, which is India's largest digital crypto exchange, and other crypto exchanges were charged for actively assisting around 16 china-based fintech companies in money laundering. These Chinese loan apps took money from poor and gullible Indians and siphoned off the proceeds using the crypto route.
"Some out of them (platforms under the ED lens) have happened to use the WazirX platform. WazirX has been cooperating with the investigators by providing them with all the necessary details, information, and documents of the alleged accused companies who used the WazirX platform," the company adds.
"On WazirX, the users undertake to operate as per all the applicable laws," says WazirX. Just to be sure, WazirX says it is now carrying out the KYC/AML checks, despite having no legal obligation to do so. "WazirX is like any other intermediary whose platform may have been misused," the company adds.
Nischal Shetty-led crypto platform has been in the news for all the wrong reseasons of late. When the ED launched its probe against the company last month, co-founder Shetty had publically said that the parent company Zanmai Labs Pvt. Ltd. had sold WazirX to China-originated crypto-exchange, Binance, in 2019, and that it can't be held accountable for the current activities of WazirX. Ironically, Binance CEO, Changpeng Zhao, also denied owing the company.
Later, the company said it had no idea about the purpose of such transactions on its platform, and that the platform, like any other platform, could have been "misused".
As part of the money laundering probe, the ED had earlier said that Chinese apps have shut shops in India due to predatory lending practices in violation of the RBI guidelines and diverted funds out of the country. While conducting a fund trail probe, it found a large number of funds were diverted by the fintech companies to purchase crypto assets and then launder them abroad. Most of such funds, as per the ED, were diverted to the WazirX exchange and the crypto-assets so purchased have been then diverted to unknown foreign wallets.
Apart from WazirX, as part of its ongoing probe on money laundering and tax evasions, the ED has also conducted searches across the premises of some of the biggest companies like Paytm, Razorpay, and CoinSwitch Kuber, among others. Raids were also conducted across the premises of Chinese mobile companies like Xiaomi and Vivo.