Indian crypto exchange WazirX is under serious heat from law enforcement agencies after an alleged violation of Indian laws. The said Indian Crypto Exchange has been attracting local investors for quite a while. The Directorate of Enforcement issued a notice to show-cause after an alleged Foreign Exchange Management Act (FEMA) violation in a crypto transaction worth around $372 million.
Economic Times reported that a subsidiary of Binance, the Indian Cryptocurrency exchange WazirX, is under probe after the Directorate put into question the ability to transfer funds outside of India without any government supervision.
The law enforcement officers explained that such transactions would automatically violate the Indian forex laws and enable money laundering. The said transaction type is automatically subject to government and law enforcement agency’s intervention due to these violations and suspicion of laundering money out of India.
Indian users on the WazirX platform are required to submit their Know You Customer (KYC), PAN, and Aadhaar Cards (Indian social security system) with the exchange prior to making any transactions. The KYC process is required for both individual users and companies, while the Directorate of Enforcement is of the view that the KYC procedure isn’t enough to ensure compliance with all the Indian laws. Official statement from the Directorate furthers that Bitcoin has been used for illegal activities in the past, and the possibility is still imminent without proper cryptocurrency laws.
On the other hand, the Indian crypto exchange WazirX expressed in a media statement that they can trace all the identification records back to actual users due to the availability of their official identification documents. The exchange furthers that they are preparing a detailed response to the FEMA violation charges imposed by the Directorate of Enforcement.
The violation charges come when an Indian High Court has directed WazirX to change its advertisement policy. While the exchange still seeks regulatory clarity, the matter is clouded due to a lack of a proper legal framework.