Binance’s WazirX Issued With Show Cause Notice by India’s Enforcement Directorate

11 June 2021

India’s Enforcement Directorate (ED), responsible for fighting economic crime in the country, issued a show cause notice to WazirX, a Binance-owned cryptocurrency exchange based in Mumbai.

  • The notice was issued to WazirX under the Foreign Exchange Management Act (FEMA), 1999 for transactions involving cryptocurrencies worth Rs 27.91 billion ($382 million), the agency said in a tweet on Friday.
  • Directors Nischal Shetty and Hanuam Mhatre were named alongside the company in the notice, according to The Times of India.
  • The publication cited an ED statement saying that the FEMA investigation was initiated on the basis of a money-laundering investigation into Chinese-owned illegal online-betting applications.
  • “During the course of the investigation, it was seen that the accused Chinese nationals had laundered proceeds of crime worth Rs 57 crore approximately by converting the INR deposits into cryptocurrency tether (USDT) and then transferring the same to Binance (exchange registered in Cayman Islands) wallets based on instructions received from abroad,” the statement said. (1 crore = 10 million)
  • WazirX received cryptocurrency worth Rs 8.8 billion ($120 million) from Binance accounts and transferred out cryptocurrency worth Rs 14 billion ($191 million) to Binance accounts during the investigation period, according to the statement.
  • Binance, the world's biggest crypto exchange by trading volumes, acquired WazirX in late 2019.
  • A show cause notice requires the named parties to explain or justify something to a court.
  • While the Indian media is reporting the ED statement, WazirX denied receiving any show cause notice from the agency.
  • "WazirX is yet to receive any show cause notice from the Enforcement Directorate as mentioned in today's media reports," a spokesperson told CoinDesk in a Telegram message. "WazirX is in compliance with all applicable laws."
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