The Enforcement Directorate (ED) has conducted searches against one of the directors of Zanmai Lab Pvt Ltd which owns the popular crypto-currency exchange WazirX and issued an order to freeze their bank balances to the tune of Rs 64.67 crore on money laundering charges.
The ED is conducting money laundering investigation against a number of Indian NBFCs and their fintech partners for predatory lending practices in violation of the RBI guidelines by using tele-callers who misuse personal data and use abusive language to extort high interest rates from the loan takers.
Various fintech companies backed by Chinese funds could not get NBFC license from RBI for carrying out lending business. So they devised the MoU route with defunct NBFCs to piggyback on their license. After the criminal investigation against such entities, many of these fintech APPs have shut shop and diverted away the huge profits earned using this modus operandi.
The fund trail investigation by the ED found that large amount of funds were diverted by the fintech companies to purchase Crypto assets and then launder them abroad, the agency said in a statement. These companies and the virtual assets are untraceable at the moment. Summonses were issued to the Crypto-exchanges. It is seen that the maximum amount of funds were diverted to WazirX exchange and the crypto-assets so purchased have been diverted to unknown foreign wallets.
The ED probe revealed that Zanmai Labs Pvt Ltd., the company owning WazirX Crypto Exchange, has created a web of agreements with -- Crowdfire Inc. USA, Binance (Cayman Islands), ZettaiPte Ltd Singapore -- to obscure the ownership of the crypto exchange.
Earlier, their Managing Director Nischal Shetty had claimed that WazirX is an Indian Exchange which controls all the crypto-crypto and INR-crypto transactions and only has an IP and preferential agreement with Binance.
But now, Zanmai claims that they are involved in only INR -crypto transactions, and all the other transactions are done by Binance on WazirX. They are giving contradictory and ambiguous answers to evade oversight by Indian regulatory agencies.
Despite giving repeated opportunities, WazirX failed to give the crypto transactions of the suspect fintech APP companies and reveal the KYC of the wallets. Most of the transactions are not even recorded on the blockchain, leading to the searches.
WazirXhas actively assisted around 16 accused fintech companies in laundering the proceeds of crime using the crypto route. Therefore, equivalent movable assets to the extent of Rs. 64.67 crore lying with WazirX were frozen under PMLA, the ED stated.