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WazirX, other exchanges accused of aiding drug trade, company denies

Crypto exchange WazirX was accused of aiding drug trade, adding to the list of issues that keep cropping up at the exchange. However WazirX denied its involvement and said the person accused of drug trade does not use WazirX

Mumbai / June 18, 2021 / 09:15 PM IST
WazirX app (Image: By sdx15/Shutterstock)

WazirX app (Image: By sdx15/Shutterstock)

Cryptocurrency exchange WazirX, accused of aiding drug trade by a Vice report, said on June 18 that the person driving the drug trade does not use its platform, adding to the list of controversies that the Binance-owned exchange is embroiled in.

A Vice report on June 17 said that Makarand Pardeep Adivirkar, known in India’s underground drug circuit as the “crypto king” was paying for drugs on the dark web using bitcoin, and was using WazirX and other platforms as a wallet. 

“Officials say Adivirkar’s drug transfer system was actively going on for more than two years, but it only came to light when the NCB, India’s federal drug enforcement agency, seized 20 LSD blots from an Indian village in November 2020,” the report said.

Adivikar is suspected to have smuggled and helped other dealers smuggle LSD, ecstasy, hydroponic weed and methamphetamine (meth) from Europe to India. 

WazirX however denied that Adivirkar uses its platform.

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“On 11th June 2021, WazirX had received an email from the NCB enquiring about the said accused and his trading activity on WazirX. Upon checking our records, we identified that the accused is not a WazirX user, and we communicated the same to the authorities on 12th June 2021,” it said.

“That being said, we want to reiterate that WazirX follows global best practises on KYC and AML compliances and has a robust transaction monitoring system in place. We perform a stringent KYC verification of every user to verify their identity as well as perform a secondary KYC verification through linked bank accounts of users before allowing a customer to transact on WazirX. We allow only KYC-verified and whitelisted accounts to withdraw funds from our exchange,” it added

India has seen record levels of cryptocurrency usage in the last six months, which has hugely benefited WazirX and other exchanges, even as crypto’s legality is yet unknown in India so far.

WazirX however has frequently found itself firefighting, mostly because of outages due to excessive demand. Last week though, The Enforcement Directorate (ED) issued a show-cause notice to WazirX and its directors Nischal Shetty and Sameer Mhatre on June 11 for allegedly violating guidelines in connection with transactions worth Rs 2,790.74 crore.

The notices were issued under the Foreign Exchange Management Act (FEMA), 1999, after the ED initiated an investigation on the basis of an ongoing money laundering probe into “illegal” Chinese-owned online betting applications. WazirX however said it is yet to receive any such notice.
M. Sriram
first published: Jun 18, 2021 06:39 pm

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