WazirX, once a prominent player in India’s cryptocurrency market, has come under intense scrutiny amid allegations of facilitating large-scale money laundering. The Enforcement Directorate’s investigation revealed that WazirX was used by predatory fintech companies to convert illicit funds into cryptocurrencies, which were then laundered internationally. Despite claims of collaboration with global platforms like Binance, regulatory lapses and lax KYC procedures exposed deep vulnerabilities. This case not only highlights the challenges in regulating digital assets but also underscores the urgent need for robust AML frameworks in India’s burgeoning crypto sector. The ongoing probe signals increasing enforcement focus on crypto exchanges in India.
WazirX, a prominent Indian cryptocurrency exchange owned by Zanmai Labs Pvt Ltd, has been under investigation by the Indian Enforcement Directorate since 2022 for facilitating money laundering activities linked to predatory fintech lenders and cyber theft. Large sums of illicit proceeds were converted to cryptocurrencies on the platform to obscure their origins and laundered through complex multi-wallet transactions, including transfers through Binance wallets and other exchanges. The case exposed significant regulatory gaps in India’s crypto oversight framework, with the NCDRC dismissing consumer complaints due to lack of jurisdiction and clarity in legal definitions for crypto assets. Enforcement efforts led to freezing assets worth tens of crores (hundreds of millions of rupees) and arrests related to scams linked to crypto laundering. The ongoing probe reflects India’s growing regulatory scrutiny of crypto platforms amid global concerns about illicit finance risks in digital assets.
