WazirX Under Scrutiny for Fraud Investigation

After nearly seven months, WazirX, one of India’s largest cryptocurrency exchanges, is facing intense scrutiny. The Financial Intelligence Unit (FIU) has been ordered to investigate the platform for fraud and security failures. This directive, issued by India’s Ministry of Finance on February 14, 2025, comes after WazirX suffered a significant ₹2000 crore hack, which put over ₹4500 crore in user funds at risk.

> 🚨🚨 Breaking NEWS: India’s Finance Ministry Orders FIU Investigation into WazirX for Fraud!
> — Pushpendra Singh (@pushpendrakum) March 7, 2025

Government Cracks Down on Crypto Irregularities

The investigation follows a formal complaint filed with the Finance Ministry, prompting Shri Kailash Chand Joshi, Under Secretary (Legal), to escalate the matter. Official documents now task the FIU with uncovering the full extent of WazirX’s alleged fraudulent activities. This move indicates stricter enforcement in India’s crypto sector as regulators aim to clamp down on financial misconduct and protect investor interests.

The hack resulted in significant losses for investors, with nearly 43% of users likely to lose their funds. Investigations unveiled complex hacking techniques and potential internal vulnerabilities. While WazirX has been cooperating with authorities, a clear resolution for affected users is yet to be provided.

Money Laundering Allegations and Binance Connection

Authorities have raised serious concerns over WazirX’s compliance failures. Reports suggest the platform may have facilitated money laundering for fintech firms by neglecting to enforce proper Know Your Customer (KYC) checks and failing to maintain adequate bank account records. The Enforcement Directorate (ED) has previously criticized WazirX for weak transaction controls, especially regarding dealings with Binance.

Additionally, the exchange’s significant security breach in July 2024—linked to North Korea’s Lazarus Group—exposed major flaws in its operational safeguards. Investigations revealed discrepancies in transaction data and insufficient wallet security, further raising doubts regarding the platform’s integrity.

Will WazirX Executives Face Legal Consequences?

With mounting evidence, speculation grows that WazirX co-founder Nischal Shetty and key associates could face criminal charges. If the FIU’s probe confirms financial misconduct, severe legal repercussions, including potential jail time, could ensue.

This case is set to become a landmark moment in India’s crypto regulation. If wrongdoing is proven, it could lead to stricter rules, tighter oversight, and increased accountability for exchanges operating in the country. The industry is now observing closely, as the FIU’s findings could reshape the regulatory landscape for digital assets in India.