Crypto transactions between WazirX and Binance 'cloaked in mystery', says minister

Minister of State for Finance Pankaj Chaudhary says WazirX was using the walled infrastructure of Binance, adding that crypto transactions between them were not being recorded on the blockchain.

Minister of State for Finance Pankaj Chaudhary on Tuesday said the Enforcement Directorate (ED) is examining two cases against crypto exchange WazirX under the provisions of the Foreign Exchange Management Act, 1999 (FEMA).

The minister said WazirX, operated by Zanmai Labs Private Limited India, was using the walled infrastructure of Binance but crypto transactions between them were not being recorded on the blockchain and were "cloaked in mystery".

In accordance with FEMA regulations, a show-cause notice had been issued to WaxirX for allowing outward remittance of crypto assets worth Rs 2,790 crore to unknown wallets, a report on MSN said. In June 2021, ED had summoned the firm to explain transactions involving cryptocurrencies.

To facilitate fair practices of development and maintenance of the foreign exchange market in India, FEMA forbids payments to any individual outside India, and prohibits forex deals and transfer of foreign security.

In recent times, the Indian cryptocurrency ecosystem has been receiving negative attention for various reasons, including tax evasion and money laundering.

This is not the first time the ED has issued notices to crypto firms. On July 6, crypto exchanges including CoinDCX, CoinSwitch Kuber, Unocoinwere served notices by the ED as a part of its ongoing investigation into alleged instances of foreign exchange violations.

Prior to this, the government disclosed that it had recovered Rs 95.86 crore from 11 cryptocurrency exchanges for tax evasion.

Crypto in India seems to be in a gray area with the Indian government and the Reserve Bank of India (RBI) reiterating that cryptocurrencies pose a threat to the country's economy.

In April, while addressing a seminar organised by the International Monetary Fund (IMF), the Finance Minister highlighted that cryptocurrency could be used for money laundering and regulation was the only way to tackle this.

Edited by Teja Lele


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