Crypto: In India, the assets of one of the largest exchanges frozen

After several attempts to ban cryptos in the country, Indian authorities have decided to put strict regulations to monitor the sector. They pinpointed Wazirx, one of the largest active exchanges in the country.

Wazirx in turmoil

In India, the Directorate of Law Enforcement (DE), announced on August 5 the freezing of $8.14 million in bank assets held by one of the largest crypto exchanges in the country, Wazirx. The authorities accuse the exchange of carrying out opaque activities in the country.

The freezing of Wazirx’s bank assets follows a months-long investigation it has been conducting into non-banking financial firms and their fintech partners for predatory lending practices in violation of Federal Reserve of India guidelines.

The Directorate says it has discovered that large sums of money have been diverted by fintech companies to buy crypto assets and then launder them overseas. Moreover, these companies and their virtual assets are currently untraceable. She then explains that as part of her efforts to shed light on this case, she contacted Wazirx, so that she cooperates.

But the cooperation did not go as planned. The DE claimed that the answers given by Wazirx executives are contradictory and ambiguous and that they were given to escape the scrutiny of financial watchdogs and regulators.

“Due to the non-cooperative position of the director of the Wazirx scholarship, a search operation was carried out. It has been found that Mr. Sameer Mhatre, Director of Wazirx has full remote access to the Wazirx database, but despite this, he does not provide transaction details relating to crypto assets, purchased from the products. of Instant Loan APP Fraud Crime (…) By encouraging opacity and having lax AML standards, it has actively aided approximately 16 fintech companies accused of laundering the proceeds of crime using the crypto route”we read in the official press release.

In addition, Indian authorities accuse Binance of being an accomplice of Wazirx. They relied on the announcement made in 2019 by the platform, concerning the acquisition of Zanmai Labs, the entity that operates Wazirx. In Indian public opinion, Wazirx has since always been seen as a Binance-owned company.

Denial of Changpeng Zhao

Faced with accusations of Binance’s complicity and increased interest in the case, platform founder Changpeng Zhao stepped up to claim, on Twitter that the Zanmai Labs acquisition process never went through.

“On November 21, 2019, Binance published a blog post indicating that it had acquired Wazirx. This transaction was never completed. Binance has never at any time held shares of Zanmai Labs, the entity operating Wazirx”he wrote afterwards.

He also clarified that Binance only provides wallet services for Wazirx as a technical solution, before adding that “Wazirx is responsible for all other aspects of the Wazirx exchange, including user registration, Know Your Customer (KYC), trading and initiating withdrawals”.

Following Zhao’s tweets, Nischal Shetty, founder of Wazirx hammered that the deal to acquire his company by Binance has indeed been completed and that Zanmai has obtained a license from Binance to exploit INR trading pairs -crypto on Wazirx, while Binance mines crypto-to-crypto pairs and processes crypto withdrawals.

Moreover, he shared that Binance has root access to its AWS servers, owns all crypto assets, and receives all crypto profits from Wazirx.

The exchanges are increasingly tense between the two entrepreneurs.

Accused of helping fintechs to eliminate illegal financial services products in India, the Indian exchange Wazirx has seen several million dollars of its bank assets frozen. Since it is considered an entity belonging to Binance, the Indian authorities accuse the flagship platform of being complicit in the actions of Wazirx, which Binance’s boss refutes.


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