Following the raids on WazirX, India’s financial crime-fighting agency, the Enforcement Directorate (ED), is now looking into eleven crypto exchanges for alleged Rs 1 billion in money laundering. According to the Economic Times, the funds came from a company convicted of money laundering in another rapid lending app case. The ED is also looking into it. The company is alleged to have ties to China.
According to the report, the accused firm solicited multiple crypto exchanges to purchase crypto coins worth more than Rs 100 crore. The cryptocurrency currencies were delivered to overseas wallets.
Due diligence and suspicious transaction reports (STRs) are required by cryptocurrency exchanges, which these exchanges failed to accomplish.
“While so far the agency has frozen the accounts of WazirX, similar transactions have taken place on the other exchanges and they have been asked to join the probe,” the report quoted an official aware of the matter.
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Crypto exchanges must also complete the know your customer (KYC) process for all investors. However, it was discovered that numerous exchanges did not perform KYC correctly. Many investors were tracked down using their KYC information, but they were shown to be false or different from the genuine thing.
Many firms allegedly skimmed off the money once the investigation was launched. “When these companies realized they were being investigated, they shut down and used cryptocurrency to transfer funds abroad. The opaque nature of the crypto ecosystem, along with the industry’s lack of regulation, offered the necessary cover for these enterprises to park their funds abroad “According to an ET article, a source with knowledge of the situation was mentioned.
ED is also keeping an eye on the Twitter feud between WazirX CEO Nischal Shetty and Binance CEO Changpeng Zhao. The CEOs both tweeted about their ownership of WazirX. Binance had stated its intention to take over in 2019. Zhao, on the other hand, stated that the acquisition never occurred.
In connection with a money laundering case, the ED has frozen WazirX’s bank accounts worth Rs 65 crore. According to the corporation, it is ‘actively cooperating’ the government in its probe.
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