WazirX Money Laundering Case: ‘Closing Off-Chain Fund Transfers With WazirX’, Says Crypto Exchange Binance

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New Delhi, Aug 8: Global crypto exchange Binance on Monday said it is closing off-chain fund transfers with WazirX which is facing probe for outward remittance of crypto assets worth Rs 2,790 crore to unknown wallets.

The ED (Enforcement Directorate) on Friday said it has frozen Rs 64.67 crore worth bank deposits of WazirX as part of an ongoing money laundering probe against some fraud smartphone-based loan dishing apps “backed by” Chinese funds. Crypto Exchange Binance Ceases Off-Chain Fund Transfer With WazirX After ED Raids

“In order to provide clarity and protection for users, we are removing the off-chain fund transfer channel between WazirX and Binance,” Patrick Hillmann, Chief Communications Officer, Binance, said in a statement.

Effective from August 11, 2022 at 03:00 Coordinated Universal Time (UTC), Binance will cease to support off-chain fund transfers between WazirX exchange and Binance via the “Login with Binance” option, the statement said.

Users will still be able to deposit and withdraw balances via the standard withdrawal and deposit process between Binance and WazirX, it said.

Off-chain transactions are those transactions which take place outside the blockchain of the cryptocurrency network.

The ED said it conducted raids against Sameer Mhatre, a director of Zanmai Lab Pvt Ltd, (which owns WazirX) on August 3 as he was not forthcoming with information being sought from him and was “non-cooperative”.

The federal agency in a statement said the exchange and its executives were “giving contradictory and ambiguous answers to evade oversight by Indian regulatory agencies”.

The agency said it found that a number of fintech companies involved in “predatory lending” through mobile apps in the country “diverted maximum amounts of funds to WazirX exchange and the crypto-assets so purchased have been diverted to unknown foreign wallets”.

It has come to notice that some users were given to believe that funds deposited in WazirX were managed by Binance, but this is not the case, the global crypto exchange said.

“Moving forward, Binance will support Indian regulators in the ongoing matters concerning WazirX. Binance believes in keeping an open dialogue with regulators, policymakers and the law enforcement community as we collectively seek to establish a global regulatory framework for the industry,” it said.

Minister of State for Finance Pankaj Chaudhary in a reply to Parliament said a show-cause notice has been issued under the provisions of FEMA against WazirX for allowing outward remittance of crypto assets worth Rs 2,790 crore to unknown wallets.

Further, in another case, it is noticed that WazirX has allowed the foreign users’ request to convert one crypto into another on its own platform as well as by using transfer from third-party exchanges namely FTX, BINANCE, etc, he said.

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