Largest Cryptocurrency Exchange In India Comes Under AML Investigation By Local Regulators

The Directorate of Enforcement (ED) of India has recently made an announcement in regards to the funds at WazirX. The ED has reportedly frozen the funds of the largest cryptocurrency exchange in India.

$8.1 Million Frozen by ED

The reports confirm that the Indian regulator is currently investigating accounts at the exchange. The regulator has reasons to believe that the particular accounts on WazirX are involved in anti-money laundering activities.

Therefore, the regulator has frozen $8.1 million worth of funds at the exchange. These funds are currently being investigated by the regulators who have put the exchange under a red alert.

According to the regulator, the $8.1 million worth of funds is under investigation in response to instant personal loan fraud.

Friday Announcement by the ED

On Friday, the Directorate of Enforcement made an announcement in regards to the involvement of WazirX.

The regulator has claimed that they are investigating WazirX for their involvement in the facilitation of the transactions under investigation.

According to the regulatory authority, WazirX facilitated fintech firms with no identity in processing such transactions.

Through the exchange, the fintech firms were able to purchase cryptocurrencies. After converting the funds to cryptocurrencies, the fintech firms reportedly laundered them abroad.

The Indian regulator has claimed that they are currently investigating the transactions to establish if China-based companies have some sort of involvement or not.

THE ED has claimed that they are of the view that the China-based companies are using the licensing regulations in India to circumvent Chinese bans on cryptocurrencies.

ED Froze WazirX Bank Accounts

The Directorate Enforcement has confirmed that until the completion of their investigation, the bank accounts of WazirX containing 646.7 million INR will remain frozen.

Sameer Mhatre, the co-founder of WazirX is also under investigation by the authorities.

Claims made by the ED

Although the investigation is still ongoing, still, it has not stopped the regulatory authority from making a statement pertaining to the exchange’s operations.

The regulator has claimed that the regulatory control of the exchange is very loose and it even lacks when it comes to adhering to the KYC norms.

As per the regulator, the exchange has no control over the transactions that take place between its own systems, with Binance.

The regulator has confirmed that the exchange failed to verify and investigate the origin of the funds that the firms used to purchase cryptocurrencies.

Future Situation of Cryptocurrencies in India

Being the largest crypto exchange in India, if WazirX is found guilty of negligence over the KYC and AML policies, things can become ugly for the entire crypto sector in India.

The Indian regulators are already against the adoption of cryptocurrencies. If WazirX is found guilty, the regulators will go all-out investigating all other India-based exchanges.

If more exchanges with more flaws are found, Indians may have to say goodbye to cryptocurrencies.