ED lifts freeze on WazirX accounts; banking resumes

The Directorate of Enforcement has unfrozen the bank accounts of the cryptocurrency exchange WazirX, the company said in a blog post published on Monday.

In August, the federal agency that probes money laundering said it had conducted searches on one of the directors of Zanmai Lab Pvt Ltd, which operates WazirX, and issued an order to freeze its bank balances totalling Rs 64.67 crore.

The action came as part of the ED’s investigation of 16 fintech companies and instant loan apps. The agency is probing at least ten cryptocurrency exchanges for allegedly laundering more than Rs 1,000 crore identified as proceeds of crime from firms accused in the instant loan apps case, as ET reported on August 11. Most of them have a China link.



“After an in-depth internal investigation, WazirX noticed that most of the users whose information was sought by ED were already identified as suspicious by WazirX internally and were blocked in 2020-2021,” the company said in the blog post.

"Due to the active cooperation extended by WazirX and active anti-money laundering (AML) checks that led to the blocking of suspicious accounts, ED has unfrozen the bank accounts of WazirX. WazirX is now in a position to continue its banking operations as usual,” it added.

In its note in August, the ED had alleged that the exchange “actively” assisted around 16 fintech companies under investigation on charges of money laundering to divert their proceeds of crime using the crypto route.

In the blog post, the company said WazirX had no association with any of the accused fintech and instant loan app entities. The company said it was carrying out the know-your-customer/AML checks despite having no legal obligation to do so.

“WazirX is like any other intermediary whose platform may have been misused,” it said.

Separately, in June last year, the ED had asked WazirX to explain transactions worth Rs 2,790.74 crore involving cryptocurrencies that were allegedly in violation of the Foreign Exchange Management Act (FEMA). Coinswitch Kuber and CoinDCX have also been questioned for suspected FEMA violations, ET reported on July 6. On August 27, CoinSwitch Kuber chief executive Ashish Singhal said the platform was cooperating fully with the ED “with respect to functioning of our crypto platforms/exchanges”, days after the agency carried out searches at five locations linked to the company in Bengaluru.

Instant loan app case

Thousands of instant loan application companies are under the scanner of probe agencies, including the ED, income tax, Ministry of Corporate Affairs (MCA) and the police in various states.

The MCA’s probe found that most of these Chinese-linked entities employ a similar strategy: the local entities are incorporated by chartered accountants by filing fabricated documents and registering them when the companies don’t actually exist. The probe has unearthed instances of the accused firms approaching the exchanges to buy crypto coins which are being sent to international wallets.

As part of the same probe, in August ED attached assets worth Rs 370 crore belonging to a Bengaluru-based company linked to the instant loan apps case. The assets were parked in bank accounts, payment gateway balances and wallets on the Flipvolt crypto exchange. Flipvolt is the Indian arm of Singaporean crypto lender Vauld.