Crypto Exchange WazirX Says ED Has Unfrozen Its Bank Accounts

Cryptocurrency exchange WazirX on Monday said that the Enforcement Directorate (ED) has unfrozen its bank accounts which were frozen as part of the agency’s probe in illegal Chinese loan apps.

“WazirX is now in a position to continue its banking operations as usual,” the exchange said in a statement.

Last month, the ED froze the crypto exchange’s bank assets worth INR 64.67 Cr. In a statement, the investigation agency said then that it conducted searches on one of the directors of Zanmai Labs Pvt Ltd, the owner of WazirX, and issued an order to freeze bank balances to the tune of INR 64.67 Cr.

In its latest statement, WazirX said that the ED has been conducting an investigation of 16 fintech companies and instant loan apps, some of which happened to use WazirX. 

The exchange said that it has been cooperating with the investigators, and has provided the investigative agency with all the necessary details, information and documents of the alleged accused companies.

WazirX also said that it has no link with any of the alleged accused fintech and instant loan app entities which are under the ED investigation. The exchange said it carries out the know your customer (KYC) and anti-money laundering (AML) checks despite having no legal obligation to do so. 

“After an in-depth internal investigation, WazirX noticed that most of the users whose information was sought by ED were already identified as suspicious by WazirX internally and were already blocked in 2020-2021,” the crypto exchange said, adding that it is like any other intermediary whose platform may have been misused. 

However, the ED has not shared any update on the matter yet. 

ED’s Crackdown On Crypto Exchanges

Following the freezing of WazirX bank accounts by the ED, Binance CEO Changpeng Zhao said that his exchange never acquired WazirX despite a public announcement about it in 2019. Zhao claimed the deal was never closed.

“Binance does not own any equity in Zanmai Labs, the entity operating WazirX and established by the original founders,” Zhao said on Twitter. 

WazirX CEO Nischal Shetty said in tweets that Zanmai Labs and WazirX are two different entities. While Binance does not hold any equity in Zanmai Labs, WazirX was acquired by Binance, Shetty claimed.

Within one week of the clash, the crypto exchange’s trading volume declined over 50% to $3 Mn on August 11 from $6.8 Mn on August 4.

The ED is investigating multiple crypto exchanges as part of its probe in the instant loan apps case. Most of these apps, accused of indulging in predatory lending practices, were allegedly operated by Chinese entities and nationals. Besides, the operating entities transferred the proceeds of crime outside India using the crypto exchanges, the agency has claimed.

Last week, ED sources told Inc42 that no crypto exchange has been given a clean chit till now in the case.