Blocked 700 crypto accounts between April-Sep over irregularities: WazirX

The crypto exchange received 828 requests from law enforcement agencies, of which 764 were Indian and 64 were foreign

Cryptocurrency exchange platform WazirX blocked over 700 accounts between April and September, based on directives from law enforcement agencies and internal assessments of alleged irregularities, the company said in a transparency report on Monday.

The crypto exchange platform recorded 10 million transactions during the first half of FY23. The company received 828 requests from law enforcement agencies (LEAs), of which 764 were Indian and 64 were foreign-based enforcement agencies.

WazirX has worked with entities such as the National Investigation Agency, Enforcement Directorate, State Cyber Crime Cells, Intelligence Fusion & Strategic Ops (IFSO) Delhi, Special Task Force, Narcotics Control Bureau, Bhopal Police, Crime Branch, and CID. Foreign-based LEAs include the Toronto Police Department, Federal Bureau of Investigation (FBI), German Police Agencies, United Kingdom Police, Interpol, Dutch Police, Austrian Police, and Europol.

All requests pertained to investigations under which criminal proceedings were initiated against the accused. Most requests came from regulators and law enforcement agencies in Maharashtra. West Bengal and other eastern states recorded a large number of cases of identity theft, money laundering, and fund misappropriation.

Several Indian authorities have begun getting tougher with crypto exchanges over alleged cases of illegal fund transfers, scams, cheating, and forgery. The Centre has imposed a tax on cryptocurrencies, while also clarifying that the levy does not mean crypto has been legalised. 

The Directorate of Enforcement (ED) had issued a show-cause notice (SCN) to WazirX under the provisions of FEMA for allowing outward remittance of crypto assets worth Rs 2,790 crore to unknown wallets, Minister of State for Finance, Pankaj Chaudhary, had told Rajya Sabha in August 2022. 

“All of these requests pertained to matters in which criminal proceedings, investigations, and inquiries were initiated against the accused persons, and information was sought from WazirX as to whether such accused had dealt in crypto through our platform. WazirX promptly provided all information as sought, and our compliance rate in record timeliness and accuracy was 100 per cent,” the company said.

WazirX has more than six million registered users and offers over 450 tradable cryptocurrencies. The platform allows users to invest in INR, USD and Bitcoin, and make peer-to-peer transactions.

The company said it proactively reported suspicious transactions to law enforcement agencies such as the Financial Intelligence Unit, India (FIU-IND). It has also deployed third-party forensic tools from TRM Labs and Chainalysis to monitor suspicious transactions.

“The team reported transactions of suspicious nature, where the trading volumes of users were not aligned with individual ITR or financial status or income, and transactions by users were deemed to be high-risk ones as per alerts received from third-party forensic tools,” the crypto exchange platform said.