India’s largest crypto exchange WazirX is in “compliance with all applicable laws” and will “fully cooperate” in any investigation, said Founder Nischal Shetty, in response to reports that the Enforcement Directorate has issued a show-cause notice to the startup for undertaking transactions worth over Rs 2,790 crore in alleged violation of the Foreign Exchange Management Act (FEMA) rules.
Nischal said neither the company nor its directors, Nishchal and Sameer Mhatre, have received any formal communication or show-cause notice from ED as yet. He said,
“WazirX is yet to receive any show cause notice from the Enforcement Directorate as mentioned in today’s media reports. WazirX is in compliance with all applicable laws… Should we receive a formal communication or notice from the ED, we’ll fully cooperate in the investigation.”
Earlier on Friday, the ED issued a statement saying that it stumbled upon the transactions, worth Rs. 2,790.74 crore of the company during an ongoing money laundering probe into the “Chinese-owned” illegal online betting applications. The agency said it found that “the accused Chinese nationals had laundered proceeds of crime worth about Rs 57 crore by converting Indian Rupee (INR) deposits into cryptocurrency tether (USDT) and then transferred it to Binance (exchange registered in the Cayman Islands) Wallets based on instructions received from abroad.
“In the period under investigation, users of WazirX via its pool account, have received incoming cryptocurrency worth Rs 880 crore from Binance accounts and transferred out cryptocurrency worth Rs 1,400 crore to Binance accounts. None of these transactions are available on the blockchain for any audit or investigation,” the ED claimed.
Binance is considered a market leader in this domain and had acquired WazirX in 2019.
However, Nischal, in a series of tweets on the microblogging site Twitter, clarified saying the company was fully compliant with all applicable laws. He further added,
“We go beyond our legal obligations by following Know Your Customer (KYC) and Anti Money Laundering (AML) processes and have always provided information to law enforcement authorities whenever required. We are able to trace all users on our platform with official identity information.”
Separately, WazirX Co-founder and COO Siddharth Menon, who assured users their “funds are safe,” also tweeted to clarify on WazirX-Binance off-chain transfers, saying:
- Both the accounts are operated by the same owner, linked by the same email.
- No third-party transfers, unlike blockchain transfers.
- KYC is a mandate for withdrawals.
- Account linking is permanent.
