India freezes assets of Binance affiliate WazirX

India freezes assets of Binance affiliate WazirX

Representations of cryptocurrencies in this illustration taken on January 24, 2022. REUTERS/Dado Ruvic/Illustration/File photo

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MUMBAI, Aug 5 (Reuters) – India’s financial crime agency said on Friday it had frozen the assets of WazirX, linked to the world’s largest digital currency exchange Binance, as part of its investigation into suspected violations of foreign exchange regulations.

The federal Enforcement Directorate (ED) said it froze assets worth 646.70 million rupees ($8.16 million).

“We have been fully cooperating with the Enforcement Directorate for several days and have responded to all their inquiries fully and transparently,” said a spokesperson for WazirX, which is among the largest virtual currency exchanges in India.

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

The agency said its action was related to the investigation into the crypto exchange’s suspected role in assisting instant loan app companies to launder the proceeds of crime by converting them into cryptocurrencies on the 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 shadow banks and their fintech companies for violating central bank norms and indulging in predatory lending practices.

“While doing fund trail investigations, ED found that large amount of funds were diverted by the fintech companies to buy crypto assets and then launder them abroad… maximum amount was diverted to WazirX exchange and crypto assets so purchases have been diverted to unknown foreign wallets”, says a release.

Many of these fintech companies engaging in illegal lending practices were supported by Chinese funds, the investigative agency added. (https://bit.ly/3zArOBV)

The ED started 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 that it had ‘acquired’ WazirX. This transaction was never completed. Binance has never – at any time – owned any shares in Zanmai Labs,” Zhao tweeted.

Binance only provides wallet services for WazirX as a technical solution, he said.

In 2021, the ED investigated a money laundering case involving Chinese-owned illegal online gaming applications. During the investigation, it was found that the laundered proceeds of crime worth about 570 million rupees had been converted into cryptocurrencies using the Binance platform, the ED said. read more

($1 = 79.2040 Indian Rupees)

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Reporting by Nupur Anand in Mumbai and Yuvraj Malik in Bengaluru; editing by Louise Heavens, Jason Neely, Vinay Dwivedi and Maju Samuel

Our standards: Thomson Reuters Trust Principles.

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