As reported by The Economic Times, at least ten crypto exchanges are being investigated by the Enforcement Directorate (ED) of India. The exchanges are accused of laundering around Rs. 1000 crore ($125 million).
The ED is the economic intelligence agency of India. The agency is responsible for enforcing economic law, and fighting crimes related to finance and economy.
As per reports, the money in question has been identified as criminal proceeds of firms in the instant loan app case. The report also highlights that most of the firms have a “China link.” People familiar with the matter told The Economic Times that the firms in question approached exchanges to purchase crypto worth more than Rs. 100 crore ($12.5 million).
As per the report, the purchased crypto was then sent to international wallets. The exchanges are accused of not conducting enhanced due diligence.
The report states that the KYC (Know-your-customer) details obtained by the exchanges were suspicious. However, the exchanges claim that they were meeting the compliance requirements.
One person told the Economic Times that,
“Once these firms learned that they were under the scanner, they shut shop and used the crypto route to siphon the funds abroad. “
More trouble for India’s crypto scene?
The probe comes hot on the heels of WazirX‘s predicament. The popular exchange found itself in the middle of a spat between founder Nischal Shetty, and Binance chief, Changpeng Zhao, or CZ.
Indian officials reportedly raided the WazirX director’s properties last week in connection with a suspected cryptocurrency fraud. Following the publication of the news, Zhao tweeted that Binance did not own WazirX. Shetty, on the other hand, responded that Binance did in fact own WazirX. A 5th August press release from the ED recognizes Zanmai Labs Pvt Ltd. as the owner of WazirX.
Moreover, CZ even advised WazirX users to transfer their funds to Binance, as they could shut down the platform. Nonetheless, nothing of that sort has happened as of yet.