Ten crypto exchanges under ED lens for allegedly laundering Rs 10 billion

Many investors were traced based on their KYC details available with these crypto exchanges, but they were found to be fake or different from the real ones

After conducting raids on WazirX, the Enforcement Directorate (ED) is investigating over ten crypto exchanges for alleged money laundering of Rs 1o billion. According to a report by Economic Times, the money came from a firm accused of laundering money in another instant loan app case. It, too, is being probed by the ED. The firm is said to have links with China.

The report further said that the accused firm approached various crypto exchanges to buy crypto coins for over Rs 100 crore. The crypto coins were sent to international wallets.

Crypto exchanges need to conduct due diligence and raise suspicious transaction reports (STRs), which these exchanges failed to do.

"While so far the agency has frozen the accounts of WazirX, similar transactions have taken place on the other exchanges and they have been asked to join the probe," the report quoted an official aware of the matter.

Crypto exchanges are also required to complete the know your customer (KYC) process for all their investors. However, it was found that the KYC was not done properly by several exchanges. Many investors were traced based on their KYC details, but they were found to be fake or different from the real ones.

After the probe was started, many firms allegedly siphoned off the money abroad. "Once these firms learned that they were under the scanner, they shut shop and used the crypto route to siphon the funds abroad. The opaque nature of the crypto ecosystem and the industry not being regulated provided the requisite cover for these firms to park their assets offshore," ET report quoted a person aware of the matter.

ED is also monitoring the social media row between WazirX CEO Nischal Shetty and Binance CEO Changpeng Zhao. Both the CEOs tweeted about the ownership of WazirX. Binance had announced that it was taking over in 2019. However, Zhao said that the acquisition never took place.

ED has frozen the bank accounts of WazirX, worth Rs 65 crore, in connection to a money laundering case. The company has stated that it is 'actively assisting' the agency in the investigation.