Minister of State for Finance Pankaj Chaudhary on Tuesday said the Directorate of Enforcement is probing alleged money laundering of Rs 2,790 crore through crypto exchange WazirX.
The ED is investigating two cases related to Crypto-currency against WazirX under the provisions of Foreign Exchange Management Act, 1999 (FEMA), he said in a written reply to the Rajya Sabha.
“In one of the cases, investigation done so far has revealed that one Indian Crypto-exchange platform, Wazirx, operated by Zanmai Labs Private Limited in India was using the walled infrastructure of Cayman Island based exchange BINANCE. Further it has been found that all crypto transactions between these 2 exchanges were not even being recorded on the blockchains and were thus cloaked in mystery,” he said.
Accordingly, he said, a Show Cause Notice (SCN) has been issued under the provisions of FEMA against WaxirX for allowing outward remittance of crypto assets worth Rs 2,790 crore to unknown wallets.
Further, in another case, it is noticed that Indian Exchanges namely WazirX has allowed the foreign users’ request to convert one crypto into another on its own platform as well as by using transfer from third-party exchanges namely FTX, BINANCE, etc, he said.
In reply to another question, Chaudhary said cryptocurrencies and Non-Fungible Tokens (NFTs) are by definition borderless and require international collaboration to prevent regulatory arbitrage.
Therefore, any legislation for regulation or for banning possession of and trade in such a borderless sector can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards, he said.