ED issues show cause notice to WazirX directors Nischal Shetty, Sameer Mhatre

The agency initiated FEMA investigation on the basis of the ongoing money-laundering investigation into Chinese-owned illegal online betting app

  • Money9
  • Updated On - June 11, 2021 / 03:05 PM IST
ED issues show cause notice to WazirX directors Nischal Shetty, Sameer Mhatre

The Enforcement Directorate (ED) on June 11 issued a show-cause notice to WazirX and its directors Nishchal Shetty and Sameer Mhatre under the Foreign Exchange Management Act, 1999 (FEMA) for transactions involving cryptocurrencies worth Rs 2,790.74 crore.

The agency initiated FEMA investigation on the basis of the ongoing money-laundering investigation into Chinese-owned illegal online betting applications.

“During the course of the investigation, it was seen that the accused Chinese nationals had laundered proceeds of crime worth Rs 57 crore approximately by converting the INR deposits into Crypto-currency Tether (USDT) and then transferring the same to Binance (exchange registered in Cayman Islands) Wallets based on instructions received from abroad,” the agency said in a statement.

“WazirX does not collect the requisite documents in clear violation of the basic mandatory Anti Money Laundering (AML) and Combating of Financing of Terrorism (CFT) precaution norms and FEMA guidelines,” the agency added.

“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. 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. Should we receive a formal communication or notice from the ED, we’ll fully cooperate in the investigation,” Nishchal Shetty said in a series of tweets.

The ED said, 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 Rs1,400 crore to Binance accounts.

“It was found that the WazirX Clients could transfer ‘valuable’ crypto-currencies to any person irrespective of its location and nationality without any proper documentation whatsoever, making it a safe haven for users looking for money laundering/ other illegitimate activities,” the ED said.

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