New Delhi: One of the directors of Zanmai Lab Private Limited, which operates the well-known cryptocurrency exchange WazirX, has been searched by the Enforcement Directorate. Their bank balances of Rs 64.67 crore must be frozen, according to a directive from the financial investigation agency.
In order to extort high interest rates from loan applicants, a number of Indian NBFC companies and their fintech partners are being investigated by the ED for money laundering. These companies engaged in predatory lending practises that violated RBI guidelines and used telemarketers who used abusive language and misused personal data.
Various fintech companies backed by Chinese funds could not get NBFC license from RBI for carrying lending business. So they devised the MoU route with defunct NBFCs to piggyback on their license.
After the criminal investigation began, many of these fintech apps have shut shop and diverted away the huge profits earned using the above modus operandi. While doing fund trail investigation, ED found that large amount of funds were diverted by the fintech companies to purchase crypto assets and then launder them abroad. These companies and the virtual assets are untraceable at the moment.
The financial investigation agency served summonses on the cryptocurrency exchanges. The majority of the funds were seen to be transferred to the WazirX exchange, and the cryptocurrency assets that were purchased there were then sent to unidentified international wallets. says ED.
The ED said, “Zanmai Labs Pvt Ltd – the company owning WazirX Crypto Exchange – has created a web of agreements with — Crowdfire Inc. USA, Binance (Cayman Islands), Zettai Pte Ltd Singapore — to obscure the ownership of the crypto exchange. Earlier, their Managing Director Mr Nischal Shetty had claimed that WazirX is an Indian Exchange which controls all the crypto-crypto & inr-crypto transactions and only has an IP & 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 & ambiguous answers to evade oversight by Indian regulatory agencies,” the central agency observed during investigation.
All crypto-crypto transactions are controlled by Binance, which is once again without any known office, any known employee, and only occasionally responds to inquiries on firstname.lastname@example.org. WazirX operates from a cloud-based software (@AWS Mumbai), all employees work from home, and the registered office is a 2-chair co-working Wework space.
WazirX repeatedly offered chances, but it never provided the cryptocurrency transactions of the questionable fintech APP companies or disclosed the KYC of the wallets. The majority of transactions are also not visible on the blockchain.
WazirX operates on cloud-based software (@AWS Mumbai), all employees work from home, the registered office is a 2-chair co-working Wework space, and Binance controls all cryptocurrency transactions (despite the fact that it has no known office, no known employees, and infrequently responds to emails sent to email@example.com).
The questionable fintech APP companies’ crypto transactions and the wallets’ KYC were not disclosed by WazirX despite numerous opportunities to do so. On the blockchain, the majority of transactions are not also documented.