The Enforcement Directorate (ED) issued a show cause notice to cryptocurrency exchange WazirX and its directors Nischal Shetty and Sameer Mhatre. This notice was issued under the Foreign Exchange Management Act, 1999 (FEMA) for transactions worth Rs 2,790.74 crore, stated the report.
According to Moneycontrol, the agency initiated the FEMA investigation after it was found that money has been used through the system to bet on a Chinese-owned "illegal" online betting applications.
The agency found that the WazirX clients could transfer 'valuable' cryptocurrencies to any person irrespective of its location and nationality without any proper documentation. ED believes that this gave an opportunity in finding a safe haven for users looking for money laundering and other illegitimate activities.
Recently, the Reserve Bank of India (RBI) has told banks that they cannot refer to its April 2018 circular to warn against investments into cryptocurrency and deny cryptocurrency services.
The 2018 circular of the central bank had said that in view of the associated risks, entities regulated by the RBI shall not deal in virtual currencies or provide services for facilitating any person or entity in dealing with or settling VCs.