State Finance Minister Pankaj Chaudhary on Tuesday said the Law Enforcement Department was investigating allegations of money laundering of Rs 2,790 crore through cryptocurrency exchange WazirX. The ED is investigating two crypto-related cases against WazirX under the provisions of the Foreign Exchange Management Act 1999 (FEMA), he said in a written response to Rajya Sabha.
“In a number of cases, the investigation carried out to date has revealed that an Indian cryptocurrency exchange platform, WazirXoperated by Zanmai Labs Private Limited in India using the walled infrastructure of the Cayman Island based exchange Binance. Furthermore, it was found that all crypto transactions between these two exchanges are not even recorded on blockchains and therefore shrouded in mystery,” he said.
Accordingly, he said, an official cause notice (SCN) has been issued under FEMA regulations against WazirX for allowing offshore remittance of crypto assets worth Rs2,790 crore in unknown wallets.
Furthermore, in another case, it can be observed that Indian Exchanges specifically WazirX allowed a request from foreign users to convert one cryptocurrency into another. on its own platform as well as by using transfers from third party exchanges namely FTXBinance, etc., he said.
Therefore, any law that regulates or prohibits such borderless possession and trade can come into force only after substantial international cooperation on risk and benefit assessment as well as as the development of common classifications and standards, he said.