The ED was investigating a money laundering case in 2021 involving Chinese-owned websites that offered illicit online gambling. As a result of the findings, India has freezed assets of Binance linked crypto exchange WazirX.
As part of its investigation into potential violations of foreign exchange regulations, India’s financial crime-fighting agency announced on Friday that it has frozen the assets of WazirX, a company affiliated to Binance, the biggest digital currency exchange in the world.
According to the federal Enforcement Directorate (ED), assets worth $8.16 million (646.70 million rupees) were frozen.
One of the biggest virtual currency exchanges in India, WazirX, said in a statement, “We have been fully cooperating with the Enforcement Directorate for several days and have responded to all their queries fully and transparently.”
“We do not agree with the allegations in the ED press release. We are evaluating our further plan of action.”
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The organization asserted that its action was connected to the probe into the probable role played by the cryptocurrency exchange in aiding instant loan app companies in the conversion of criminal earnings into cryptocurrencies on its platform.
One of Zanmai Lab’s directors was the target of searches; Zanmai Lab is the owner of WazirX.
According to the ED, it is investigating multiple shadow banks and their fintech companies for money laundering because they have violated central bank regulations and engaged in predatory lending practices.
“While doing fund trail investigation, ED found that large amounts of funds were diverted by the fintech companies to purchase crypto assets and then launder them abroad … maximum amount of funds were diverted to WazirX exchange and the crypto assets so purchases have been diverted to unknown foreign wallets,” it said in a release.
The investigative agency said that many of these fintech businesses engaging in unlawful lending practices were financed by Chinese resources (read below).
WazirX was the subject of an inquiry by the ED last year for alleged violations of foreign exchange laws.
On Friday, Binance CEO Changpeng Zhao tweeted that the company does not possess any Zanmai Labs stock.
“On 21 Nov 2019, Binance published a blog post that it had ‘acquired’ WazirX. This transaction was never completed. Binance has never – at any point – owned any shares of Zanmai Labs,” Zhao tweeted.
As a technical solution, he claimed that Binance only offers wallet services to WazirX.
The ED was investigating a money laundering case in 2021 involving Chinese-owned websites that offered illicit online gambling. According to the ED, it was discovered during the inquiry that the laundered proceeds of crime, which totaled roughly 570 million rupees, had been converted into cryptocurrency using the Binance platform.
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