A top government source said on Thursday that the Enforcement Directorate has unearthed a probe into alleged money laundering by crypto exchange WazirX and the subsequent altercation between its promoters.
The source added that people should exercise caution in the absence of a regulation to govern cryptocurrencies and so-called exchange trading.
“Caution is the word that should be on the minds of people dealing with crypto. In the episode of WazirX, people found out many darker sides, caution is necessary in crypto transactions,” the source said.
The Enforcement Directorate (ED) is probing money laundering charges against WazirX.
The agency has frozen bank deposits worth Rs 64.67 crore as part of an ongoing money laundering probe against some fraudulent smartphone-based loan apps “backed” by Chinese funds.
Within days of the ED action, a public spat broke out between global cryptocurrency platform Binance CEO Changpeng Zhao and WazirX co-founder Nischal Shetty.
Binance’s CEO distanced himself from operating the WazirX exchange, while the Indian entity said it was looking into legal action against Binance.
Minister of State for Finance Pankaj Choudhary said in Parliament that a show-cause notice has been issued against WazirX for allowing outward remittance of crypto assets worth Rs 2,790 crore to an undisclosed wallet under the provisions of the Foreign Exchange Management Act (FEMA).
Furthermore, in another case, it was observed that WazirX allowed requests from foreign users to convert one crypto to another on its platform as well as use transfers from third party exchanges, namely FTX, Binance, etc. Granted, he said.
Government sources said the WazirX episode has brought up a lot of issues and the ED is probing the matter.
India does not recognize cryptocurrencies, but imposes a 30 per cent tax on income earned from such virtual digital assets.
Finance Minister Nirmala Sitharaman is making a strong case for global regulation of cryptocurrencies to tackle the risks of money laundering and terror funding.
At the G20 Ministerial Symposium on Taxes and Development in Bali, it suggested that the G20 should examine the feasibility of bringing non-financial assets such as crypto within the ambit of the automated exchange of information between nations to check tax evasion .
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)