ED summons Binance execs


A month ago, the Enforcement Directorate sent a notice to cryptocurrency exchange WazirX over an investigation into money laundering by Chinese betting apps. Now, the agency has summoned executives from WazirX’s parent firm Binance Holdings to find out whether it had anything to do with the alleged money laundering.

Goldberg

Also in this letter:

  • Sequoia India promotes five executives to MD
  • NSO Group blocks some govt clients from using Pegasus
  • The biggest deals of the week

Now, WazirX’s parent firm Binance under ED scanner

Binance

India’s anti-money laundering agency is looking into whether Binance Holdings had a role to play in its ongoing investigation into betting apps that allegedly laundered money through WazirX, India’s largest cryptocurrency exchange, Bloomberg reported earlier today, citing sources. Binance acquired WazirX in 2019.

The latest: The Enforcement Directorate (ED) has summoned Binance executives for questioning and is awaiting a response, the people said, asking not to be identified as the matter is under investigation.

The ED is investigating betting apps run by Chinese operators, which collected more than Rs 1,000 crore over the past 10 months, for allegedly laundering part of the money through WazirX.

A Binance spokesperson denied receiving any summons, but said, “We have always been a proactive player in fighting crime. We comply with regulator requests all around the world and we don’t comment on any specific engagements.”

The story so far: On June 2, the ED sent a show-cause notice to WazirX, asking it to explain transactions worth Rs 2,790.74 crore on its platform that allegedly violated India’s foreign exchange rules.

WazirX’s platform allowed clients to transfer cryptocurrencies to anyone, anywhere without any proper documentation, “making it a safe haven for users looking for money laundering/ other illegitimate activities”, ED had said in a statement then.

■ Then, on June 19, we reported that the Mumbai wing of Narcotics Control Bureau (NCB) had sought details from WazirX about an alleged drug dealer on its platform, but the crypto exchange said that the person did not use its platform.

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■ On July 2, WazirX announced it had partnered with blockchain intelligence firm TRM Labs to enhance its capabilities to detect crypto fraud. In an interaction with ETtech on that day, WazirX’s founder Nischal Shetty confirmed that he had received the show-cause from ED.

Also Read: ED stance strikes at the heart of cryptocurrency in India

Meanwhile, WazirX is on course to launch a decentralised cryptocurrency exchange, Shetty told us just two days ago. Decentralised exchanges are less cumbersome legally and provide greater transparency and control to crypto holders.

Also Read: India’s cryptocurrency industry draws up ‘legitimacy plan’

About Binance: Incorporated in the Cayman Islands without any corporate headquarters, Binance has been facing regulatory crackdowns (read here and here) as nations intensify scrutiny of the industry amid concerns that cryptocurrencies are being used to conceal proceeds of money laundering, drugs and terrorism.


Sequoia India elevates five executives to MD rank

Sequoia India

(From left) Ashish Agarwal, Harshjit Sethi, Sakshi Chopra, Ishaan Mittal and Tejeshwi Sharma, new managing directors of Sequoia India

Sequoia India has promoted five of its executives to the rank of managing director, as the marquee Silicon Valley venture capital firm looks to bulk up its leadership team in India amid unprecedented dealmaking in the country’s startup ecosystem.

Who got promoted? Ashish Agarwal and Harshjit Sethi from the fund’s venture team, and Tejeshwi Sharma, Ishaan Mittal, and Sakshi Chopra of the growth team.

The news was announced to the Sequoia team internally first, and then in a blog post.

  • “Today, we are excited to announce significant additions to our leadership team at Sequoia India, a move that underscores our commitment to serve founders better across stages and sectors,” a Sequoia spokesperson said.

The five will join Sequoia India’s existing managing directors Rajan Anandan, Shailendra Singh, Mohit Bhatnagar, Ravishankar GV, Shailesh Lakhani, Abheek Anand, Piyush Gupta and Amit Jain.

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Rush of IPOs: The promotions come on the back of Sequoia seeing a bunch of its portfolio firms tapping the public markets, leading with food-delivery platform Zomato which had a stellar listing on the Indian bourses on July 23.

Also Read: How Zomato executed its IPO plan

In an interview with ET, Singh and Anandan, who co-lead of Sequoia’s Surge accelerator programme, had said that a dozen of its firms are at various stages of IPO preparation.

Sequoia Capital India, has backed startups such as Byju’s, Razorpay, Oyo among 100 others. It had racked up $195 million for its second seed fund, in addition to the $1.35 billion corpus it raised for India and Southeast Asia in July last year.

Tweet of the day


NSO Group blocks access to Pegasus for some govts

NSO Group

NSO Group Technologies, the Israeli technology firm behind the Pegasus spyware, has temporarily blocked several of its clients from using its technology as it investigates possible misuse of its spyware, NPR has reported. The company says it only sells the spyware to governments.

The suspension is in response to the Pegasus Project, an investigative journalism project conducted by a consortium of 80 journalists from 17 media outlets across 10 countries. It revealed how NSO’s software was used to target the phones of hundreds of people across the world.

Read our explainer on the Pegasus software and the Project here

  • “There is an investigation into some clients. Some of those clients have been temporarily suspended,” an anonymous source in the company told NPR, without divulging details on which governments and agencies had lost access to Pegasus.

NSO Group is yet to respond to ET’s queries.

Offices searched: On Wednesday, Israeli authorities inspected the offices of NSO Group near Tel Aviv, in response to the Pegasus Project. The country’s government is under pressure to act since it regulates the sale of indigeneous technology to other nations.

  • “Representatives of several bodies visited the NSO office in order to assess the allegations raised in regards to the company,” Israel’s defence ministry said in a statement.
  • NSO has said that it is “working in full transparency with the Israeli authorities” after early reports described the move on NSO’s office by Israeli authorities as a raid.
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The company has maintained that Pegasus has no links to the phone numbers that were allegedly hacked using its software. “Almost everything we checked, we found no connection to Pegasus,” NPR quoted an NSO employee as saying.

Meanwhile, India’s Supreme Court agreed to hear the plea of senior journalist N Ram, seeking an independent investigation into the Pegasus matter, next week.

Calling for an urgent hearing, Ram’s counsel Kapil Sibal told the court, “Civil liberties of citizens, politicians belonging to opposition parties, journalists, and court staff have been put under surveillance.”


ETtech Deals Digest

In Droom, India got its 17th unicorn—a private company with a valuation of at least $1 billion —this week. Gupshup, Ixigo and ShareChat parent Mohalla Tech were the other prominent startups that received funding. (read more)

deals digest

Delhi High Court to hear two WhatsApp cases on Aug 27

The Delhi High Court has adjourned two separate pleas filed by Facebook-owned WhatsApp to August 27. The two pleas are:

  • A challenge to the “traceability” clause in India’s revised Information Technology Rules, 2021, which came into effect on May 26.
  • A challenge to a single-judge order that refused to stay a CCI investigation into WhatsApp’s updated privacy policy.

A division bench of Chief Justice DN Patel and Justice Jyoti Singh, which is hearing both matters, allowed requests by lawyers for the Union of India and the Competition Commission of India seeking a week’s accommodation in both cases and adjourned the hearings.





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