WazirX appears to be in trouble since ED sent the Show Cause Notice to its M / s Zanmai Labs Pvt Ltd. has published. WazirX is indeed India’s leading crypto exchange platform that enables customers to trade cryptocurrencies.
A Although Nischal Shetty, the director, declined any notification, it was certainly issued by Foreign Exchange Management because of the ongoing money laundering of INR 2,790.74 billion. The news was announced on June 11, 2021 through the Directorate of Enforcement’s official Twitter handle.
WazirX denied all allegations of receiving notification of show cause from ED. In addition, her Twitter handle said that WazirX is always providing all information to the authorities.
So does that mean WazirX is P2P regulated? Wasn’t it involved in money laundering? Let’s explore. First, if you don’t know what exactly WazirX P2P is then let me tell you that it enables users to sell and buy USDT directly with other sellers and buyers. P2P here means “People to People”.
Previously, on May 20, 2021, WazirX closed its Paytm account. Since then, WazirX P2P has become the common mode for selling and buying USDT using the Indian National Rupee (INR). Well, it was primarily because Paytm Payments Bank stopped cryptocurrency transactions.
WazirX P2P works by matching one person who wants to sell the USDT for fiat with another person who wants to buy the USDT in exchange for fiat. This way, the buyer will transfer the money to the seller’s account using UPI, and WazirX will provide the USDT to the buyer once the seller has confirmed the payment. Looks easy, doesn’t it?
But recently it is accused of Rs 2790.74 crore worth of money laundering through illegal online betting applications owned by China. Online gambling or wagering is a type of game of chance that is practiced on the internet using various applications including gambling.
It was found that the Chinese nationals converted the laundered INR to USDT and then transferred it to the Binance wallets.
Is WazirX P2P unregulated?
In particular, Section 3 of the Foreign Exchange Management Act provides that a person may not trade in foreign exchange. The central government sets up the Directorate of Enforcement (ED) to conduct an investigation into those companies that violate FEMA rules.
You can find out more about FEMA here https://m.rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=164
WazirX can correctly be called unregulated as it does not even collect the required mandatory documents, which is against the FEM guidelines. The platform has transferred cryptos worth Rs 1,400 crore and received cryptos worth Rs 880 crore in and from Binance accounts. The critical point is that these transactions were not available for investigation on the blockchain.