Enforcement Directorate, a foremost monetary regulatory agency in India, has ordered an unnamed bank holding WazirX’s Rs 64.67 crore to freeze the account.
According to reports, the regulators froze the account because of an ongoing investigation into money laundering activities by crypto exchanges and other private financial institutions.
The agency revealed that its initial investigations showed that some fintech lenders in the country were in direct violation of the country’s guidelines.
However, the fintech firms soon diverted their funds to crypto exchanges in an attempt to launder these funds -the majority of these funds were sent to WazirX.
WazirX was Uncooperative
The agency explained that WazirX executives were not cooperative, at the same time it revealed that the firm provided contradictory statements about its operation.
Per the regulator, the exchange initially said it “is an Indian Exchange which controls all the crypto-crypto and INR-crypto transactions and only has an IP and preferential agreement with Binance.”
However, the exchange would later say it only handles “INR-crypto transactions, and all the other transactions are done by Binance.”
According to the regulator, “WazirX works from a Cloud-based software and all employees work from home. Despite giving repeated opportunities, WazirX failed to give the crypto transactions of the suspect fintech APP companies and reveal the KYC of the wallets. Most of the transactions are not recorded on the blockchain also.”
ED specifically mentioned that “Sameer Mhatre, director of WazirX, has complete remote access to the database of WazirX, but despite that, he is not providing the details of the transactions relating to the crypto assets, purchased from the proceeds of crime of an Instant loan app fraud.”
WazirX did not immediately respond to Watcher Guru’s request for comment.
Indian regulators have increased their oversight of the crypto industry in recent times citing the destabilizing effect this could have on its economy.