On 5 August, the WazirX crypto exchange in India had 646.7 million rupees of bank balances frozen by the Enforcement Directorate (ED) of the Ministry of Finance. WazirX had allegedly allowed the purchase of crypto assets from the proceeds of crime. [Enforcement Directorate, PDF]
Everyone thought for three years that WazirX was Binance’s Indian branch. But now everyone is denying ownership — because they don’t want to be held responsible for laundering money for loan sharks via crypto.
WazirX tweeted just a few hours before the ED shut them down: [Twitter]
BRB, working on something interesting. 1000 retweets & I will drop a hint
I’m pretty sure it wasn’t this, though.
The loan shark app scam
WazirX was used by crooks to cash out from fraudulent loan-sharking apps based in China. The scam was pretty standard loan-sharking.
A lender would find prospects who were poor and cash-strapped. An app listing would promise them instant cash, limited verification and no paperwork.
The lender would charge a 15-25% “processing fee” at the time of the loan, and then add steep interest on top. Someone might borrow Rs. 50,000, actually be given Rs. 1,000, then have to pay back Rs. 1,500 within 7 days. Some borrowers ended up paying Rs. 300,000 just in interest and fees.
Others ended their own lives. The apps obtained the borrower’s phone contact list and social media details. The lenders would call the borrowers and their friends and families repeatedly, and…
