Bank a/cs of WazirX director frozen under PMLA following raid

ED is conducting a laundering investigation against numerous Indian NBFC companies and their fintech partners “for predatory lending practices in violation of the Reserve

guidelines and by using tele-callers who misuse personal data and use abusive language to extort high interest rates from the loan takers.”

ED said since the investigation began, it found a large amount of funds were diverted by fintech companies to purchase crypto assets and laundered abroad. The enforcement agency said that the maximum amount of funds was diverted to WazirX exchange and the crypto assets purchased were diverted to foreign wallets.

ED also found that Zanmai Labs – the owner of WazirX – created a web of agreements with various entities, including Crowdfire (founded by Nischal Shetty), Cayman Island-registered Binance, and a Singapore-based entity called Zettai.

Due to a non-cooperative stand of the director of WazirX, a search operation was conducted under the Prevention of Money Laundering Act (PMLA) on August 3, where it was found that Sameer Mhatre, a director with WazirX, had complete remote access to the database of WazirX, but despite that, he was not providing the details of the transactions relating to the crypto assets purchased from the proceeds of crime of Instant Loan APP fraud.

“The lax KYC norms, loose regulatory control of transactions between WazirX amd Binance, non-recording of transactions on blockchains to save costs and non recording of the KYC of the opposite wallets has ensured that WazirX is not able to give any account for the missing crypto assets. It has made no efforts to trace these crypto assets,” ED said.

The finance ministry informed the Rajya Sabha on August 2 that the
ED was investigating two cases against WazirX under the Foreign Exchange Management Act, 1999 (FEMA). The ministry had further said that Zanmai Labs was using the walled infrastructure of Binance.

“By encouraging obscurity and having lax AML norms, it has actively assisted around 16 accused fintech companies in laundering the proceeds of crime using the crypto route,” it said.

WazirX did not respond to ET’s query seeking comment.