WazirX Refutes ED's Money Laundering Allegations
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Why Did ED Freeze WazirX's Bank Accounts?
The ED press release said that the action against WazirX is part of its money laundering investigation against non-bank financial companies (NBFC) and their fintech partners for predatory lending practices in violation of the RBI guidelines. Various fintech companies backed by Chinese funds could not get an NBFC license from RBI for carrying out lending business. So, they devised the MoU route with defunct NBFCs to piggyback on their license.
It also said that after the criminal investigation began, many of these fintech APPs shut shop and diverted away the huge profits earned using the above modus operandi. While doing a fund trail investigation, ED found that a large chunk of funds was diverted by the fintech companies to purchase crypto assets and then launder them abroad.
WazirX Refutes Money Laundering Allegations
Refuting the money-laundering allegations, WazirX said that they have been fully cooperating with the Enforcement Directorate for several days and have responded to all their queries with the utmost transparency. The exchange also said that it is assessing its future course of action. Responding to the allegations, WazirX founder also defended the exchange denying any malpractice and instead placed the onus on Binance.
However, Binance CEO Changpeng Zhao said that Binance does not have control on WazirX operations, including user sign-up, KYC, trading, and withdrawals. He also said these were controlled by WazirX's founding team.
It is clear that the founders of WazirX and Binance don't stand in concurrence with each other with regard to operational control. However, it remains to be seen how WazirX users are affected by this action from ED and their money laundering investigation.