New Delhi, Aug 5 : The Enforcement Directorate (ED) on Friday conducted searches on the home of one of the directors of Zanmai Lab Pvt Ltd which operates the well-known cryptocurrency exchange WazirX and also issued an order to block its bank balances up to the amount of approximately 64.67 crore.The ED is conducting an investigation into money laundering against a range of Indian NBFC companies as well as their fintech partners due to committing predatory lending practices in violation of the RBI guidelines and using phone-callers who steal personal data and employ abusive language to extort high interest rates from lenders.
The ED official stated that a variety of fintech companies that were backed by Chinese funds were unable to obtain an NBFC license from RBI to operate the business of lending.
Therefore, they came up with the MoU route with abandoned NBFCs in order to leverage their license.
“After the criminal probe was launched the majority of the Fintech APPs have shut down and redirected the massive profits made by the above methods of operation,” the official said.
In the course of its investigation into the trail of funds The ED discovered that money was diverted by fintech firms to purchase crypto assets and later laundering them overseas.They and their virtual assets are not traceable in the present.The summons were issued to cryptocurrency exchanges.It is evident that the highest amount of money was transferred to WazirX exchange, and the crypto assets which were purchased were then transferred to foreign wallets that were not known.
“Zanmai Labs Pvt.Ltd.- the company that controls WazirX Crypto Exchange, has forged an array of agreements with Crowdfire Inc.USA, Binance (Cayman Islands), Zettai Pte Ltd Singapore to hide the ownership of the cryptocurrency exchange.In the past the Managing Director of the company Nischal Shetty had claimed that WazirX is an Indian Exchange which controls all the crypto-crypto and inrcrypto transactions, and has only an IP and preferential agreements with Binance.However, now Zanmai says that they’re involved in solely inr-crypto transactions and all other transactions are handled through Binance using WazirX.
They are offering contradictory and unclear answers to avoid the oversight of Indian regulatory authorities,” the ED has observed.
WazirX is a Cloud software (@AWS Mumbai), all employees work from home, and the registered office is a two chair co-working space for Wework, and all transactions involving crypto are managed by Binance .
The ED stated that despite numerous occasions, WazirX failed to give the cryptocurrency transactions of the suspicious Fintech APP companies and to reveal the KYC of the wallets.The majority of the transactions aren’t recorded on the blockchain , either.
WazirX has informed the ED that prior to July 2020 they did not keep track of the details of the bank account through which funds were being transferred to the exchange in order to buy crypto assets.
“No physical address verification has been conducted.
There is no verification of the sources of the funds of the clients.No EDD is conducted.
No STRs were brought up,” the ED alleged.
The official stated that due to of the non-cooperative stance of the Director of WazirX exchange the search was carried out in accordance with PMLA on the 3rd of August.
It was discovered that Sameer Mhatre, Director of WazirX has full remote access to the database of WazirX however, despite that he does not provide specifics of the transactions that relate to the crypto assets that were purchased with the proceeds of the crime of Instant Loan APP fraud.
“The inflexible KYC rules, loose regulation of transactions between WazirX & Binance and Binance, inability to record of transactions made on Blockchains to reduce costs and non-recording of the KYC of the wallets that are in opposition has resulted in WazirX cannot provide any information about those missing crypto assets.
It has not made any efforts to track the missing crypto assets.Through encouraging obscurity and having loose AML rules it has assisted 16 accused Fintech firms in laundering proceeds of criminal activity using the crypto method.Thus, equivalent assets that could be moved in the amount of the amount of.64.67 crore that are with WazirX were frozen” the official claimed.
atk/bg
