Helped Illegal Chinese Firms Divert Money

Helped Illegal Chinese Firms Divert Money

The raids yesterday were conducted on Sameer Mhatre, a director of the company.

The Enforcement Directorate (ED) has searched premises belonging to a director of Zanmai Lab – the company that runs popular cryptocurrency exchange WazirX – in Hyderabad, and ordered a freeze on its bank balance of Rs 64.67 crore, officials said today.

This comes just days after Minister of State for Finance Pankaj Chaudhary told Parliament that the ED is investigating two cases related to WazirX, for alleged violation of the Foreign Exchange Management Act.

The raids yesterday were conducted on Sameer Mhatre, a director of the company. “He has complete remote access to the database of WazirX, but he is not providing the details of the transactions.”

It’s suspected that some Chinese-backed online financial companies — or instant-loan apps — diverted their profits into buying crypto assets, to eventually launder the money abroad. These included fintech firms that were denied loan-business licences, because they had misused personal data and threatened loan takers with abusive calls and extortion, according to ED officials. These companies had tied up with defunct firms to use their licences.

After investigation began, they diverted their profits by busying crypto assets and sending the money abroad.

“It is seen that maximum amount of funds were diverted to WazirX exchange and the crypto assets so purchased have been diverted to unknown foreign wallets,” an ED note said. These companies and the virtual assets are untraceable at the moment, as per the agency.

Investigators believe Zanmai Labs — the company that owns WazirX — has created “a web of agreements” with companies in the US, Cayman Islands, and Singapore. The intention is to “obscure the ownership of the crypto exchange”.

The company’s managing director, Nischal Shetty, has earlier said that WazirX is an Indian exchange, which only has a tie-up with Cayman Islands-based exchange Binance.

No latest response was received from the company or Mr Mhatre.