WazirX is a large cryptocurrency trading exchange in India that Binance launched in 2019. Just in, August 5 2022, India's financial security agency said it has frozen WazirX assets. The Federal Enforcement Directorate (ED) decided to take this move following the violation of foreign exchange regulations by WazirX.
As of now, the ED has frozen assets worth $8 million US Dollars, which is 600 million rupees.
($1 USD = 79.20 Indian Rupees)
Reasons for India Freezing WazirX
ED said the key reason for freezing WazirX is its involvement with instant loan app companies in laundering the proceeds of crime by converting it to cryptocurrency. This means that WazirX helps instant loan apps get away with financial crime by hiding in cryptocurrency.
ED even conducted a search on the director and is conducting further investigation on shadow banks and fintechs that have violated the Central Bank regulations by using unjust lending practices.
How does WazirX help in Money Laundering Fraud?
1. Using Shadow Banks and their Fintechs.
2. Converting money to cryptocurrency to hide tracking.
3. Laundering the money abroad.
4. Diverting funds to foreign crypto wallets.
5. Many Fintech companies receive support and funds from China.
After a fraud, fintech companies diverge large amounts of funds to WazirX, converting it to cryptocurrency. The firms then launder the crypto assets abroad. Other assets are also diverted to unknown foreign cryptocurrency wallets.
The fund trail also realized that the Fintech companies receive support and funds from China.
When did ED launch an Investigation on WazirX?
The ED investigation on WazirX has been on since last year. As ED was looking into a money-laundering case from an illegal Chinese betting company, it realized that close to 570 million rupees had been converted to cryptocurrency using Binance.
($1 USD = 79.20 Indian Rupees)
Closing Thoughts
This is a second heavy blow to Indian cryptocurrency traders. This same year, India imposed tax regulations on cryptocurrency, causing trading volumes to go down. Therefore, Binance and WazirX are greatly affected by this decision.
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