India freezes WazirX assets linked to Binance

Cryptocurrency representations were captured in this illustration, January 24, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

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MUMBAI (Reuters) – India’s Financial Crimes Control Agency said on Friday it had frozen the assets of WazirX, which is linked to the world’s largest cryptocurrency exchange Binance, as part of its investigation into a suspected violation of foreign exchange rules.

The Federal Enforcement Administration (ED) said it has frozen assets of 646.70 million rupees ($8.16 million).

A spokesperson for WazirX, which is among the largest cryptocurrency exchanges in India, said, “We have been fully cooperating with the execution department for several days and have responded to all their inquiries completely and transparently.”

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“We do not agree with the allegations in the ED press release. We are evaluating our further action plan.”

The agency said its work is related to investigating the suspected role of a cryptocurrency exchange in helping instant loan application companies launder proceeds of crime by converting them into cryptocurrency on its platform.

The searches were conducted on one of the directors of Zanmai Lab, which owns WazirX.

The ED said it was conducting money laundering investigations against several of its shadow banks and fintech firms for violating central bank rules and indulging in predatory lending practices.

“While conducting a money trail investigation, the ED found that large amounts of money were transferred by fintech companies to buy crypto assets and then laundered offshore… The maximum amount of funds was transferred to the WazirX exchange and crypto assets were transferred so the purchases were transferred to Unknown foreign wallets.

The investigative agency added that many of the fintech companies that engage in illegal lending practices were backed by Chinese money. (https://bit.ly/3zArOBV)

ED launched its investigation last year into WazirX for suspected violations of foreign exchange rules.

Binance CEO Changpeng Zhao tweeted on Friday that the company does not own shares in Zanmai Labs.https://bit.ly/3bt0Sw5)

“On November 21, 2019, Binance published a blog post “acquiring” WazirX. This transaction was never completed. Binance has never – at any time – owned any shares in Zanmai Labs,” Zhao wrote.

He said that Binance only provides wallet services to WazirX as a technology solution.

In 2021, the director was looking into a money laundering case involving illegal Chinese-owned online betting apps. During the investigation, it was found that the laundered crime proceeds of around 570 million rupees had been converted into cryptocurrency using the Binance platform, ED said. Read more

(dollar = 79.2040 Indian rupees)

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Additional reporting by Noupur Anand in Mumbai and Yuvraj Malik in Bengaluru; Editing by Louise Heavens, Jason Neely, Vinay Dwivedi and Magu Samuel

Our criteria: Thomson Reuters Trust Principles.