India’s financial crime-fighting agency on Friday said it has frozen the assets of WazirX linked to Binance, the world’s largest digital currency exchange, as part of an investigation into suspected violations of foreign exchange regulations.
The Federal Enforcement Directorate (ED) said it seized assets worth Rs 646.70 million ($8.16 million).
A WazirX spokesperson said, “We have been cooperating fully with the Enforcement Directorate for several days now and have answered all their questions in a thorough and transparent manner.”
“We do not agree with the allegations in the ED’s press release. We are evaluating our further course of action.”
The agency said its action was related to an investigation into the crypto exchange’s suspected role in helping instant loan app companies convert proceeds of crime into cryptocurrencies on its platform.
The discovery was made on one of the directors of Zanmai Lab, the owner of WazirX.
The ED said it was conducting money-laundering probe against several shadow banks and their fintech companies for violating central bank norms and indulging in predatory lending practices.
“While investigating the fund trail, the ED found that large amounts of funds were diverted by fintech companies to purchase crypto assets and then launder them abroad… to unidentified foreign wallets,” it said in a release. .
The probe agency said that many of these fintech companies engaged in illegal lending practices were backed by Chinese funds.
The ED had launched its probe into WazirX last year for suspected violations of foreign exchange regulations.
Binance CEO Changpeng Zhao tweeted on Friday that the company does not own shares in Zanmai Labs.
Quick threads on Binance and WazirX, and some misreporting.
Binance has no equity in Zanmai Labs, the entity that operates WazirX and was founded by the original founders.
— CZ Binance (@cz_binance) 5 August 2022
Zhao tweeted, “On November 21, 2019, Binance published a blog post that it had acquired WazirX. This transaction was never completed. Binance will never hold – at any time – any shares of Zanmai Labs. didn’t own it.”
He added that Binance only provides wallet services for WazirX as a technical solution.
In 2021, the ED was probing a money laundering case involving illegal online betting applications owned by Chinese.
The ED had said that during the investigation, it was found that the proceeds of crime amounting to around Rs 570 million were converted into cryptocurrencies using the Binance platform.