The tough stance and unclear regulations in the Indian crypto market has always been a concern to the investors in the region. However, the authorities are getting serious about investigating ten crypto exchanges for allegedly laundering over 1 billion rupees ($12.5 million) in digital assets.
According to a report by The Economics Times, India’s Enforcement Directorate (ED) has accused several companies of money laundering to purchase cryptocurrencies worth more than 100 million rupees, which were then transferred to other foreign wallets, most of which were connected to mainland China.
The sources added that these accounts belonged to people who lived in far-off places “with no connection to the transactions,” and that the exchanges collected KYC data of questionable provenance.
Despite not generating any suspicious transaction reports (STRs) that might have revealed information about alleged money laundering, the exchanges said that they were in line with KYC laws.
According to sources familiar with the inquiry, this made it more challenging to track down the suspicious account, which after being made aware of the investigation, proceeded to withdraw its funds and log off.
“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,” said the report.
WazirX possibly among the targeted exchanges
As TheCoinRise recently reported, one of the biggest domestic crypto exchanges in India, WazirX has also been targeted by the ED. While WazirX CEO is trying to stay out of the matter by stating that Binance owns the company, Binance claims to be only an off-chain transaction solution and a wallet service provider. However, both the companies have agreed to cooperate with the ED over the “shady transactions” investigation.
Notably, recently the regulator searched the premises of the trading platform’s director and froze WazirX bank accounts containing around $8.13 million, for alleged money laundering.