ED is identifying INR 1000 Cr as the proceeds of crime from the companies that are being investigated within the current loan app case, with the majority of them being linked to China
According to ED that a few of these loan apps contacted the crypto exchanges to purchase INR 100 crores worth of crypto and then transfer the funds to wallets in other countries
ED has also asked other crypto exchanges to join in the probe after it raided and frozen the assets of WazirX
The Enforcement Directorate (ED) is conducting an investigation into at most the 10 crypto exchanges. The ED is investigating the claim that these exchanges have facilitated the laundering of more than 11,000 INR Cr.
An ET report, citing sources, said they said that ED has identified INR 1000 Cr as the proceeds of crime from the companies accused within the instant loan app case The majority of them being linked to China.
In the ED investigation, a number of these loan companies made contact with crypto exchanges to purchase INR 100 crores worth of cryptocurrency and then transfer the funds to international wallets. The ED discovered that the exchanges didn’t conduct any additional due diligence, and also did not issue suspicious report of transactions (STRs).
This is after the ED blocked assets of India’s biggest cryptocurrency trading platform, WazirX. The agency that enforces financial law has also requested other exchanges join in the investigation as well following similar cases of loan apps attempting to contact cryptocurrency exchanges to conduct similar transactions were discovered.
The person mentioned in the report mentioned above said that after the instant lending apps realized that they were under investigation when they discovered that they were being investigated, they shut down the company and employed cryptocurrency to transfer the funds overseas.
The reality that crypto remains in a regulatory gray area and the inherent invisibility of the crypto industry gave the companies enough protection to keep their assets in offshore locations.
It isn’t the first time an Indian agency has begun looking at crypto exchanges for being accused of breaking the law. In the last month, ED sent notices to CoinDCX and CoinSwitch Kuber concerning allegations of violations of law on foreign exchange.
On March 1, the federal government announced that it discovered GST evasion up to the amount of INR 95.86 Crore across 11 cryptocurrency exchanges that include WazirX, CoinDCX and CoinSwitch Kuber.
It is worth noting the fact that WazirX was targeted by ED due to the same reason, and this caused a heated debate with WazirX the CEO Nischal Shetty as well as Binance Chief Executive Officer Changpeng Zhao on Twitter the week before.
the WazirX-Binance Row
There is a possibility that ED is also believed to be studying the public dispute between the two CEOs whose firms include Zanmai Labs and Binance – run WazirX. In particular, ED examines concerns related to ownership and non-compliance which are being discussed between each of the CEOs.
It’s also interesting to take note of the fact that when WazirX’s headquarters were searched the Binance CEO stated that the Chinese crypto exchange did not have any equity in WazirX in contrast to Binance’s acquisition of WazirX that Binance made in November, 2019..
WazirX released a statement couple of days ago that stated it is not associated with the customers that ED invests in, and that it is in compliance in accordance with law enforcement authorities.
ED is believed to be looking into the transactions of a few users. Zanmai Labs has no affiliation to these users and is not aware of the motive behind their transactions. Zanmai Labs is in the position of any other intermediary that could have been used to defraud customers, said WazirX.
They both Shetty and Zhao haven’t yet made clear who owns WazirX The only thing that’s been clarified is WazirX is managed by Binance as well as Zanmai Labs. Binance is the operator of WazirX’s crypto to cryptocurrency P2P transactions, whereas Zanmai manages crypto to INR non-P2P transactions.
But, ED said in its earlier announcement it was Zanmai Labs, which owns WazirX and has forged an array of contracts in conjunction with Crowdfire Inc. USA, Binance (Cayman Islands) as well as Zettai Pte Ltd Singapore to conceal who owns the cryptocurrency exchange.