[Technology](https://goodwordnews.com/tech/) Police Tactics Cool India’s Crypto Winter: Andy Mukherjee If success has many fathers, then one crypto exchange, in the midst of a storm of money laundering, has become an orphan.After Indian law enforcement agencies froze $8 million (around Rs.63 crore) in WazirX assets, Binance CEO Changpeng Zhao denied owning the country’s largest crypto exchange.Binance’s November 2019 blog post, which announced the acquisition, is now accompanied by a postscript: “The acquisition described in this blog was limited to an agreement to purchase certain assets and intellectual property by WazirX.
Binance has not purchased any stake (and does not own any stake) in Zanmai Labs, the entity operating WazirX and created by the original founders.One of these founders, however, disputes this version of the agreement.Nischal Shetty, now based in Dubai according to media reports, claims that Binance effectively controls WazirX – it owns the domain name and could shut down the platform.
The only thing not under the thumb of the world’s largest crypto exchange is Zanmai, Shetty claims.“Naturally, if Binance wants to control Zanmai, they can acquire shares,” he tweeted.So why isn’t he doing it, if, as Shetty claims, he was interested in doing it as early as February? CZ, as the CEO of Binance is popularly known, will not be stupid enough to enter the den of the dreaded Indian Enforcement Directorate to claim Zanmai.Certainly not after the ED’s August 5 press release alleging that Zanmai owns WazirX – and that the crypto exchange was used to launder money by predatory Chinese lending apps.(In a press release, Zanmai said it was cooperating with the Binance platform and was in the position of any other intermediary “whose platform could have been misused.”) These dubious apps rented the balance sheets of Indian non-bank lenders and disappeared with their illegal profits.“The maximum amount of funds were diverted to the WazirX exchange and the crypto assets thus purchased were diverted to unknown foreign wallets,” the management said, adding that Zanmai officials “are giving contradictory and ambiguous answers to evade to the oversight of Indian regulatory agencies”.What monitoring? The Reserve Bank of India, the banking regulator, hates cryptocurrencies.
In 2018, the RBI asked banks not to entertain customers trading in virtual currencies.
Exchanges like WazirX, then a young startup, survived the draconian diktat by limiting themselves to facilitating person-to-person transfers.
In 2020, the industry heaved a sigh of relief when the Indian Supreme Court declared the RBI ban unconstitutional.However, all that has happened since then is that authorities have started taxing crypto trading, without bothering to regulate it.
The “crypto winter” caused by the collapse of stablecoin TerraUSD may have convinced the RBI that its dismissive stance was the right one.RBI Governor Shaktikanta Das called cryptocurrencies a “clear danger” in Singapore last month.Its host country – a much smaller economy – has also taken a few hits in this year’s turmoil, most recently with the freezing of payments from crypto lender Hodlnaut, which had an agreement in principle to obtain a license under the Singapore Payment Services Act.
The approval was rescinded, but the limited fallout on the local financial system means the monetary authority does not view crypto as a systemic risk.It’s not something the city-state is going to ban.India could also have said that if people want to play with dangerous chips anyway, let’s make sure they don’t hurt themselves or others.
By showing little interest in regulating digital assets, the RBI has left the industry in a bad place.Thanks to a recent Indian Supreme Court ruling, the enforcement directorate has almost unlimited powers to carry out arrests and searches, seize property and record self-incrimination statements.Bail is almost impossible and the burden of proving innocence falls on the accused.A few more scandals, and the ED could get the closure the RBI has long desired: India’s considerable talent in this area will flee to more welcoming jurisdictions like Dubai.
If a comparison with a global financial center like Singapore is not very useful, perhaps India should take a cue from Thailand.There, existing digital regulations are being changed to actively give the central bank a role in protecting investors in licensed entities like Zipmex (Thailand) Limited, a cryptocurrency exchange that briefly suspended coin withdrawals .Meanwhile, all the RBI wants is a blanket ban on crypto, because “it is not possible to regulate something that you cannot define.” Such lame excuses have led to the current bizarre situation where no one claims to claim parentage of India’s largest crypto exchange.That’s exactly what you get when you let the risk of prison do the work of adult supervision.
In its press release, the law enforcement agency criticized WazirX for its alleged lack of due diligence: “No physical address verification is carried out,” it said.“There is no control over the source of their clients’ funds.” If this image of a lawless terrain is true, then much of the blame lies with the RBI’s dangerous disinterest.Letting enforcement leadership add its own deterrent to the crypto winter will cause the industry to shrivel and die.
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