India’s Law Enforcement Directorate (ED) has unfrozen the bank accounts of Indian crypto exchange WazirX, according to a statement from the exchange posted on Monda.
WazirX claims to have cooperated with local authorities during their anti-money laundering (AML) investigation by providing all necessary documents and requested details. The survey targeted 16 fintech companies and instant lending apps, some of which solicited the exchange’s services.
The exchange, however, said it has a no-tolerance stance towards any illegal activity on the platform. Additionally, he said most of the users targeted in the ED investigation had already been flagged as suspicious by WazirX and blocked in 2020-2021.
WazirX told Cointelegraph the matter was still under investigation, but the funds were released as no suspicious activity was found, with “no further comment at this time.”
Funds in WazirX bank accounts had been frozen since August 5, when the ED first announced the investigation. The blocked funds totaled more than $8.1 million.
ED seeks the director of WazirX Crypto-Currency Exchange and freezes his bank assets worth Rs 64.67 Crore for helping accused instant loan app companies launder fraudulent money through buying and transfer of virtual crypto assets.
— ED (@dir_ed) August 5, 2022
The ED charges against WazirX claimed that it processed $130 million in money transfers to wallets under investigation for illegal activity. In light of the accusations, Binance, which previously tried to acquire the company in 2019, distanced itself from the exchange via a public statement from CZ on Twitter.
Related: Binance sides with Indian regulators in WazirX fallout to stop supporting off-chain transfers
Prior to the recent activity, the exchange was under investigation by the ED in 2021 for money laundering charges related to illegal online gambling products linked to Chinese entities.
This time around, the crackdown on crypto exchanges in the country did not stop with WazirX. On August 12, the ED froze a total of $46.4 million in bank balances at Yellow Tune and balances at crypto exchange Flipvolt. The allegations were also related to money laundering and the company was accused of being a shell for Chinese entities.
Authorities said the funds will remain unavailable until the exchange can account for the proceeds of crime it has transferred out of the country.
These investigations started piling up after the Indian government announced crushing new crypto tax regulations, which went into effect earlier this year.