The Indian Enforcement Directorate issued a Show Cause Notice to WazirX Crypto-currency Exchange on Friday for violating the Foreign Exchange Management Act (FEMA) of 1999 in transactions involving cryptocurrencies valued Rs 2,790.74 crore. According to a statement from the ED, the FEMA probe was launched in response to an ongoing money-laundering probe against Chinese-owned unlawful online betting applications.
"During the course of the investigation, it was discovered that the accused Chinese nationals had laundered approximately 57 crore in proceeds of crime by converting INR deposits into Crypto-currency Tether (USDT) and then transferring the same to Binance (exchange registered in the Cayman Islands) Wallets based on instructions received from abroad," the ED said in a statement.
WazirX, according to the ED, allows a wide range of crypto-currency transactions, including the exchange of CCs for INR and vice versa; exchange of CCs; Person to Person (P2P) transactions; and even the transfer/receipt of Crypto-currency held in its pool accounts to wallets of other exchanges, which could be held by foreigners in foreign locations.
Now although the quantity of money involved in this ordeal is fairly minimal, the implications of the principle set here is much more valuable, heavily deterring organizations from laundering and hiding money through extremely new crypto-related trades and methods.
Global digital currency exchanges are looking at setting up shop in India (according to sources), following in the footsteps of market leader Binance, as the government in New Delhi dithers over creating legislation that may outlaw cryptocurrencies.
Opponents of the proposed prohibition argue that it will limit the economic strength of a youthful, tech-savvy country of 1.35 billion people. Although there are no official statistics, industry experts estimate that 15 million crypto investors in India own over 100 billion rupees ($1.37 billion).