'Crypto king' accused in drug peddling case not a WazirX user, clarifies exchange
India's largest crypto exchange WazirX on Friday clarified that Makarand Adivirkar -- who has been accused by the Narcotics Control Bureau (NCB) of using Bitcoins to buy drugs on the dark web -- is not a WazirX user and that the same had been communicated to the probe agency last week.
The exchange's statement came in response to media reports suggesting Makarand may have been leveraging platforms like WazirX to buy drugs using bitcoin, following which several users on Twitter questioned whether the company follows Know Your Customer (KYC) norms when opening accounts.
"On 11th June 2021, WazirX had received an email from the NCB enquiring about the said accused and his trading activity on WazirX. Upon checking our records, we identified that the accused is not a WazirX user, and we communicated the same to the authorities on 12th June 2021," WazirX said in a statement.
The startup also reiterated that it follows "global best practises on KYC and anti-money laundering compliances and has a robust transaction monitoring system in place," adding that it allows only KYC-verified and whitelisted accounts to withdraw funds from the exchange.
"We perform a stringent KYC verification of every user to verify their identity as well as perform a secondary KYC verification through linked bank accounts of users before allowing a customer to transact on WazirX. We allow only KYC-verified and whitelisted accounts to withdraw funds from our exchange," it said.
Earlier this month, WazirX said it is in "compliance with all applicable laws" and will "fully cooperate" in any investigation, following reports that the Enforcement Directorate had issued a show-cause notice to the startup for undertaking transactions worth over Rs 2,790 crore in alleged violation of the Foreign Exchange Management Act (FEMA) rules.
Co-founder Nischal Shetty said, at the time, that "WazirX is in compliance with all applicable laws... Should we receive a formal communication or notice from the ED, we'll fully cooperate in the investigation." Last week too, Nischal, in a series of tweets on the microblogging site Twitter, clarified saying the company was fully compliant with all applicable laws. He further added,
"We go beyond our legal obligations by following Know Your Customer (KYC) and Anti Money Laundering (AML) processes and have always provided information to law enforcement authorities whenever required. We are able to trace all users on our platform with official identity information."