India and its love-hate relationship with crypto is not news. The outrageous 30% tax on crypto revenue has significantly affected the Indian crypto market. Despite this, the government is not ready to regulate or legalize crypto in the country. While India’s position in the crypto market remains questionable, a popular exchange WazirX was being probed for allegedly allowing the laundering of a whopping $350 million or Rs 2,790 crore.
Last month, the Directorate of Enforcement [ED] posted a showcase notice to the platform. This was issued under the Foreign Exchange Management Act 1999, [FEMA]. However, WazirX has asserted that it complies with all applicable laws.
Earlier this week, Minister of State for Finance Pankaj Chaudhary detailed the case at the Rajya Sabha. He said,
“In one of the cases, the investigation conducted so far revealed that an Indian crypto exchange platform, Wazirx, operated by Zanmai Labs Private Limited in India was using the island’s walled-off infrastructure. Caiman. BINANCE exchange. Further away, it was found that all crypto transactions between these two exchanges were not even recorded on the blockchains and hence shrouded in mystery.”
WazirX swims in troubled waters
In another instance, WazirX was found to allow foreign customers to trade one cryptocurrency for another on its platform and use transfers from other exchanges, such as FTX and Binance.
Chaudhary also suggested that crypto and NFTs were borderless; therefore, they demand an international coalition to limit regulatory arbitrage. The minister went on to highlight the need for international collaboration in regulating the crypto industry.
This wasn’t the first time WazirX had swum in troubled waters. As of early 2022, the exchange was under investigation for alleged tax evasion. The tax office in India is said to have recovered more than 49 million rupees in goods and services taxes, interest and penalties. However, the exchange claimed that “there was no intention to evade tax.”
Additionally, it should be noted that the co-founders of the Binance-backed exchange Nishal Shetty and Siddharth Menon moved to Dubai in April 2022. This was mainly in light of the excessive crypto tax band.