India’s financial crime agency said on Friday it froze the assets of WazirX, linked to the world’s largest digital currency exchange, Binance, as part of its investigation into an alleged breach of securities regulations. changes.
The Federal Directorate of Law Enforcement (ED) said it froze assets worth 646.70 million rupees ($8.16 million).
“We have been cooperating fully with the Law Enforcement Branch for several days and have answered all their questions in a full and transparent manner,” said a spokesperson for WazirX, which is one of the largest virtual currency exchanges in the world. India.
“We do not agree with the allegations in the ED press release. We are evaluating our further course of action.”
The agency said its action relates to the investigation into the crypto exchange’s alleged role in helping instant loan app companies launder proceeds of crime by converting them into cryptocurrencies on its platform.
The research was conducted on one of the directors of Zanmai Lab, owner of WazirX.
The ED said it was conducting money laundering investigations against several shadow banks and their fintech companies for violating central bank standards and engaging in predatory lending practices.
“During the investigation of fund trails, ED discovered that large amounts of funds were being diverted by fintech companies to purchase crypto assets and then launder them offshore…a maximum amount of funds was diverted to the WazirX exchange and crypto assets, so purchases were diverted to unknown foreign wallets,” it said in a statement.
Many of these fintech companies that engage in illegal lending practices were backed by Chinese funds, the investigative agency added.
The ED launched its investigation last year into WazirX for alleged violations of exchange regulations.
Binance CEO Changpeng Zhao tweeted on Friday that the company does not hold shares in Zanmai Labs.
Quick thread on Binance and WazirX, and some incorrect reports.
Binance does not own any stake in Zanmai Labs, the entity operating WazirX and established by the original founders.
— CZ 🔶 Binance (@cz_binance) August 5, 2022
“On November 21, 2019, Binance published a blog post indicating that it had ‘acquired’ WazirX. This transaction was never finalized. Binance has never – at any time – held shares of Zanmai Labs” , Zhao tweeted.
Binance only provides wallet services for WazirX as a technology solution, he said.
In 2021, the ED was investigating a money laundering case involving illegal Chinese-owned online betting apps.
During the investigation, it was discovered that the laundered proceeds of crime worth around 570 million rupees had been converted into cryptocurrencies using the Binance platform, said the Ed.
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