WazirX, linked to the world's largest crypto exchange, Binance, said that its bank accounts were unfrozen by India's financial crime-fighting agency after more than a month. Some of the 16 fintech companies under investigation had used the WazirX platform, the company said in a blog post on Monday. "WazirX has been cooperating with the investigators by providing them with all the necessary details, information, and documents of the alleged accused companies who used the WazirX platform," the exchange added.

On August 05, the ED raided the properties of WazirX director Sameer Mhatre for allegedly actively assisting "around 16 accused fintech companies in laundering the proceeds of crime using the crypto route." The agency also froze US$8.1 million in funds held by the exchange. The events snowballed into a Twitter spat between WazirX's co-founder Nischal Shetty and Binance's CEO Changpeng Zhao about who truly owns WazirX.

The company also stated it had no association with any of the alleged accused companies and that it had already identified and blocked most of the suspicious users after an internal investigation in 2020-2021.

From where it all started

India's Enforcement Directorate is conducting a thorough investigation against ten crypto exchanges that are being accused of laundering around INR 1 billion, which is equivalent to over US$125 million in terms of cryptocurrencies. The Enforcement Directorate of India is basically the economic intelligence agency in India. The organization is responsible for enforcing economic law and fighting crimes related to finance and the economy. The ED is currently chasing several Indian crypto companies that are accused of money laundering to make cryptocurrency purchases that were sent to other international wallets, which were mostly linked to China.

According to reports, the ED froze around US$8 million worth of assets that belonged to the India-based crypto exchange WazirX, which is one of the largest cryptocurrency exchanges in India by volume. In an interview, an official from the ED has recently demonstrated saying that similar transactions have taken place in other crypto exchanges as well. Presently, WazirX is actively assisting the ED in investing in around 16 fintech companies that are also alleged for money laundering using cryptocurrencies.

The probe comes at a time when the Indian crypto economy is at its worst. The government is constantly cracking down on the crypto market, and enhancing regulatory measures. Indian investors are readily leaving the crypto market amidst the adverse conditions that India's digital asset ecosystem is currently facing. The ED's crackdown on these crypto companies is only making things worst for the country's digital asset infrastructure.

Sources noted that these exchanges collected KYC data from users. These accounts belonged to people mostly living in remote areas with basically no connection or access to transactions. However, the exchanges denied these claims and said that they had always been complying with KYC regulations, the ED has also failed to produce any suspicious transaction reports that could yield proof of the presumed money laundering accusations. Nevertheless, the present status of the Indian cryptocurrency ecosystem is worsening the already degenerating conditions of the wider crypto market.

WazirX Coin (WZR)

This exchange allows users to trade BTC, ETH, XRP, etc., by utilizing smart contracts on the Ethereum network. In addition, it also offers various other products/services like BCH wallet services, UPI-based money transfer services, etc. However, the main USP of this crypto-exchange is that it aims to make crypto transactions more mainstream by allowing users to trade in fiat without having to go through the tedious KYC process every time they want to trade/withdraw funds.

WazirX Coin is used for all transactions on the exchange itself — in terms of both trades and withdrawals. Their unique selling proposition is that they have zero fees on transactions. Although one can already find several exchanges offering zero fees for traders, since this platform is based out of India – it could be well-received by Indian investors given that fiat currency transfers or deposits will be easy.