India’s Financial Crime Fighting Agency said Friday it had frozen the assets of WazirX, linked to the world’s largest digital currency exchange Binance, as part of its investigation into suspected currency violations.
The Federal Enforcement Directorate (ED) said it has frozen assets worth rupees 646.70 million ($8.16 million).
“We have been cooperating fully with the Enforcement Directorate for several days and have answered all their questions fully and transparently,” said a spokesperson for WazirX, one of the largest virtual currency exchanges in India.
“We disagree with the allegations in the ED press release. We are evaluating our further action plan.”
The agency said its action was related to investigating the crypto exchange’s suspected role in helping instant loan app companies launder the proceeds of crime by converting them into cryptocurrencies on its platform.
The searches were conducted on one of the directors of Zanmai Lab, owner of WazirX.
The ED said it was conducting money laundering investigations against several shadow banks and their fintech companies for violating central bank standards and indulging in predatory lending practices.
“During the fund trail investigation, ED discovered that large amounts of money were being diverted by the fintech companies to buy crypto assets and then launder them abroad… into unknown foreign wallets,” a press release reads.
Many of these fintech companies engaged in illegal lending practices were backed by Chinese funds, the research firm added.
The ED launched an investigation into WazirX last year for suspected violations of foreign exchange regulations.
Binance CEO Changpeng Zhao tweeted Friday that the company does not own any shares in Zanmai Labs.
Quick thread on Binance and WazirX, and some misreporting.
Binance does not own any shares in Zanmai Labs, the entity that operates WazirX and was founded by the original founders.
— CZ 🔶 Binance (@cz_binance) August 5, 2022
“On November 21, 2019, Binance published a blog post that it had ‘acquired’ WazirX. This transaction never completed. Binance has never – at any time – owned shares of Zanmai Labs,” Zhao tweeted.
Binance only provides wallet services for WazirX as a technical solution, he said.
In 2021, the ED investigated a money laundering case involving illegal online gambling applications in Chinese hands.
During the investigation, it was found that the laundered crime proceeds worth about 570 million rupees had been converted into cryptocurrencies using the Binance platform, the ED had said.