Indian authorities launch investigation into crypto exchanges for suspected money laundering

The local regulator suggests that the platforms assisted third-party companies in converting criminal proceeds into digital assets

12.08.2022 - 14:55

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2 min

What’s new? The Directorate of Enforcement (ED) of India has launched an investigation into at least ten cryptocurrency exchanges for allegedly laundering more than $125 million. The platforms reportedly assisted instant loan companies in laundering criminal proceeds by converting them into cryptocurrencies. Most of these firms have ties to mainland China, the Economic Times reports.

Material by Economic Times

What else does the outlet report? The investigation uncovered cases of the accused firms turning to exchanges to buy more than 100 billion rupees (~$12,57 million) worth of cryptocurrencies and sending them to international wallets, anonymous sources report. According to them, crypto platforms did not verify such transactions in any way and did not provide reports on suspicious transactions. Officials of a number of unnamed exchanges are under investigation and are expected to be re-interviewed by the ED next week.

In addition, sources noted that the exchanges collected the know your customer (KYC) details of questionable origin because the accounts being tracked belonged to people living in remote areas “having no connection with the transactions.”

Failure to comply with measures required by regulators made it difficult to track suspicious accounts, which, upon learning of the investigation, withdrew funds abroad, sources close to the investigation said.

What happened before? In early August, Indian authorities launched an investigation into cryptocurrency exchange WazirX, owned by Binance, on suspicion of laundering $350 million. The ED later froze $8,16 million worth of its assets.

On August 6, Binance CEO Changpeng Zhao denied the allegations against the company. He stressed that Binance has no financial ties to WazirX and holds no capital in its parent company, Zanmai Labs.

On August 11, ED also froze $46,5 million in assets of the Vauld lending platform.

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