Local law enforcement agencies were looking into the Indian cryptocurrency exchange on claims of money laundering, which led to the freezing of more than $8.1 million in bank account balances.
According to a statement from the exchange posted on Monda, the Enforcement Directorate of India (ED) has unfrozen the bank accounts of the Indian cryptocurrency exchange WazirX.
According to WazirX, it has been helping local authorities with their Anti-Money Laundering (AML) investigation by supplying all the required paperwork and information. The inquiry focused on 16 fintech businesses and fast loan applications, some of which asked the exchange for services.
However, the exchange declared that it had zero tolerance for any unlawful activity on the site. It further stated that WazirX has barred the majority of the targeted users in the ED probe in 2020–2021 after flagging them as suspicious.
However, funds have been released after no suspicious activity was discovered, with “no more comment at this time.”
Since the ED first disclosed the probe on August 5, money in WazirX bank accounts has been frozen. The total amount of the monies that were locked out was $8.1 million.
ED searches the Director of WazirX Crypto-Currency Exchange & freezes its Bank assets worth Rs 64.67 Crore for assisting accused Instant Loan APP Companies in laundering of fraud money via purchase & transfer of virtual crypto assets.
— ED (@dir_ed) August 5, 2022
WazirX was accused by the ED of processing $130 million in transfers of money to wallets that were being looked into for engaging in criminal activity. Through a public statement from CZ on Twitter in response to the claims, Binance, which once attempted to acquire the business in 2019, distanced itself from the exchange.
Before the recent action, the exchange was being investigated by the ED in 2021 for allegations of money laundering involving earnings from unlawful online gambling linked to Chinese organizations.
This time, WazirX was not the only cryptocurrency exchange targeted by the government’s crackdown. In total, $46.4 million in Yellow Tune’s bank accounts and balances from the cryptocurrency exchange Flipvolt were frozen by the ED on August 12. The corporation was charged with being a front for Chinese entities, and the charges also involved money laundering.
Authorities stated that the money would not be available until the exchange could give an explanation for the illegal gains it sent abroad.
After the Indian government announced onerous new crypto tax legislation that went into force earlier this year, these probes started to mount.