By Nupur Anand
MUMBAI (Reuters) – India’s financial crime-fighting agency said on Friday that it has frozen the assets of WazirX, owned by the world’s largest digital currency exchange Binance, as part of its investigation into suspected violation of foreign exchange regulations.
The federal Enforcement Directorate (ED) said that it froze assets worth 646.70 million rupees ($8.16 million).
WazirX did not immediately respond to a request seeking comment.
The agency said its action related to the investigation into the crypto exchange’s suspected role in assisting instant loan app companies in laundering the proceeds of crime by converting it into cryptocurrencies on its platform.
The searches were conducted on one of the directors of Zanmai Lab which owns WazirX, one of the largest virtual currency exchanges in the country.
The ED said that it is conducting money laundering investigations against number of shadow banks and their fintech companies for violation of central bank norms and indulging 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…(a) 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.
A lot of these fintech companies dealing in illegal lending practices were backed by Chinese funds, the investigating agency added.
The ED launched its investigation last year into WazirX – owned since 2019 by Binance, for suspected violation of foreign exchange regulations.
In 2021, ED was looking into a money laundering case which involved Chinese-owned illegal online betting applications. During the course of the investigation it was found that the laundered proceeds of crime worth approximately 570 million rupees had been converted into cryptocurrencies using the Binance platform, the ED had said.
The crackdown comes as India imposes tax regulations on virtual currencies which have dealt a heavy blow and caused trading volumes to plunge.
($1 = 79.2040 Indian rupees)
(Reporting by Nupur Anand; editing by Louise Heavens and Jason Neely)
