The Indian Ministry of Finance revealed on August 2 that cryptocurrency exchange WazirX is being investigated in two cases for money laundering and violating FX rules.
According to reports, Pankaj Chaudhary, Minister of State for Finance, stated in a written reply to the Parliamentary Upper House that the Directorate of Enforcement is investigating charges that a total of Rs 2,790 crore (about $350 million) was laundered through the cryptocurrency exchange WazirX.
WazirX executives have previously been summoned for questioning.
WazirX, which was acquired by the global exchange Binance in 2019, was reportedly one of the several domestic exchanges which were under the scanner for non-compliance with foreign exchange rules and money laundering guidelines.
In June and again in July that top executives of exchanges, including that of WazirX, were summoned by the economic agency for questioning.
The ministry has now confirmed that the ED is investigating the platform on two cases involving cryptocurrency under the provisions of the Foreign Exchange Management Act, 1999 (FEMA).
In response, he stated in the Rajya Sabha that a Show Cause Notice (SCN) under FEMA regulations had been issued against WazirX for allowing the outside repatriation of cryptocurrency assets worth Rs 2,790 crore (about $350 million) to unidentifiable wallets.
The transaction in another situation is becoming more difficult.
In another situation, the minister stated that the Indian exchange permitted overseas customers to exchange one cryptocurrency for another on its own platform as well as through transfers from other exchanges such as FTX and Binance.
This response came in response to a question from Rajya Sabha member Sushil Kumar Modi about whether some cryptocurrency exchanges allowed users from countries such as the United States and Germany to transact without KYC and AML compliance, insufficient disclosures, and agreements when performing third-party transfers.
Notably, WazirX co-founders Nishal Shetty and Siddharth Menon were said to have relocated to Dubai with their families in April of this year in response to India’s new crypto taxation legislation. Previously, the executives had disassociated themselves from the platform’s day-to-day operations.
Nonetheless, the finance ministry reaffirmed worldwide coordination to control cryptocurrencies.
“Therefore, any policy framework on cryptocurrency can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards,” he said.
Meanwhile, it is anticipated that India has between 15 and 20 million cryptocurrency users.