Binance-owned WazirX suspected of money laundering

The Enforcement Directorate (ED) of India’s Ministry of Finance said that one of the country’s largest bitcoin exchanges and its leadership are under investigation for alleged violations of foreign exchange rules, Reuters reported.

ED explained that the charges against WazirX, which Binance acquired in 2019, arose in the course of an investigation into a money-laundering case involving Chinese-owned online betting apps.

During the investigation, the agency found that laundered criminal proceeds worth about 570 million rupees (~$8.8 million) were converted into cryptocurrency using the Binance platform.

Under the Foreign Exchange Management Act (FEMA) 1999, the ED sought explanations from WazirX for transactions totalling 27.91 billion rupees (~$382 million).

ED has issued Show Cause Notice to WazirX Crypto-currency Exchange for contravention of FEMA, 1999 for transactions involving crypto-currencies worth Rs. 2790.74 Crore.

— ED (@dir_ed) June 11, 2021

According to the cited media report, Chinese nationals laundered proceeds by converting deposits in rupees into USDT and then transferring the cryptocurrency to wallets on Binance ‘based on instructions received from abroad’.

According to the ED, during the period under investigation WazirX received cryptocurrency from Binance totaling Rs 8.8 billion (~$120 million) and moved back digital assets worth Rs 14 billion (~$191 million).

“WazirX does not collect the required documents, which is a clear breach of the basic AML and CFT obligations, as well as FEMA’s guidelines,” the Enforcement Directorate said.

As reported by media, US authorities are conducting an inquiry into Binance for possible AML and tax-law violations.

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