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After WazirX, ED freezes Rs 370 crore in bank accounts of another crypto exchange

Prior to freezing the bank accounts of this crypto exchanges, the Enforcement Directorate last week said that it recently conducted searches on one of the directors of Zanmai Labs, which owns the popular crypto exchange WazirX, and issued an order to freeze Rs 64.67 crore in the bank accounts of the platform.

ET Now Digital

Updated Aug 12, 2022, 07:01 IST

New Delhi: In the second such case this month, the Enforcement Directorate (ED) has frozen bank balances totalling Rs 370 crore of a cryptocurrency exchange. The platform is under the ED lens for alleged laundering of proceeds by companies accused of operating illegal loan apps.

Officials in the know of the matter shared this with Economic Times without disclosing the name of the exchange.

Prior to freezing the bank accounts of this crypto exchanges, the agency last week said that it recently conducted searches on one of the directors of Zanmai Labs, which owns the popular crypto exchange WazirX, and issued an order to freeze Rs 64.67 crore in the bank accounts.

The latest development is part of the ED’s investigation into at least ten cryptocurrency exchanges for allegedly laundering more than Rs 1,000 crore identified as proceeds of crime from the firms accused in the instant loan-app case.

The probe found that the accused firms sought the exchanges' help in purchasing crypto coins for over Rs 100 crore and send these to international wallets. The exchanges did not conduct any enhanced due diligence and even failed to raise suspicious transaction reports (STRs), people aware of the development said.

The accused app-based loan firms allegedly used fintech for receiving payments and for payouts, according to a person in the know of it. The profits accumulated and the balance were then routed out of the country using crypto, adding another layer to the funds.

"The trail of these proceeds of crime becomes difficult to detect, as the exchange might facilitate with the KYC but has no information on the crypto-to-crypto transfer made by the accused," said the official.

However, WazirX has clarified that it was compliant with the KYC law and has a no-tolerance policy towards any illegal activities.

"In the entire loan app case, crypto exchanges were the second point of failure. The money came into bank accounts first. From banks, it flowed to crypto exchanges, so it wasn't caught at the banking level," shared an industry executive.

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