After nearly 7 months, WazirX, one of India’s largest cryptocurrency exchanges, is under intense scrutiny as 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 months after WazirX suffered a massive ₹2000 crore hack, putting over ₹4500 crore in user funds at risk.
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 signals stricter enforcement in India’s crypto sector as regulators aim to clamp down on financial misconduct and safeguard investor interests.
The hack resulted in significant losses for investors, and nearly 43% of users are likely to lose their funds, with investigations revealing complex hacking techniques and possible internal vulnerabilities. WazirX has been cooperating with authorities but has not yet provided a clear resolution for affected users.
Money Laundering Allegations and Binance Connection
However, authorities have raised serious concerns over WazirX’s compliance failures. Reports suggest the platform may have facilitated money laundering for fintech firms by failing to enforce proper KYC (Know Your Customer) checks and neglecting to maintain bank account records. The Enforcement Directorate (ED) previously criticized WazirX for weak transaction controls, particularly in dealings with Binance.
Adding to its troubles, the exchange’s massive security breach in July 2024—linked to North Korea’s Lazarus Group—exposed significant flaws in its operational safeguards. Investigations revealed discrepancies in transaction data and inadequate wallet security, further raising doubts about the platform’s integrity.
Will WazirX Executives Face Legal Consequences?
With mounting evidence, speculation is growing 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 follow.
This case is poised to become a landmark moment in India’s crypto regulation. If wrongdoing is proved, it could lead to stricter rules, tighter oversight, and heightened accountability for exchanges operating in the country. The industry is now watching closely, as the FIU’s findings could reshape the regulations scene for digital assets in India.
