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Tuesday, August 16, 2022

After ED investigation, Binance CEO Changpeng Zhao denies WazirX ownership

The Twitter feud between Nischal Shetty, co-founder of WazirX, and Binance CEO Changpeng Zhao has puzzled investors and crypto enthusiasts. 

By: Tech Desk | Pune |
Updated: August 6, 2022 6:52:02 pm
The action comes days after the ED served WazirX a notice under the FEMA Act. (wazirx.com)

Indian cryptocurrency exchange WazirX is in hot water again after Binance, the world’s largest crypto exchange, claimed that it “does not own any equity in Zanmai Labs’, the entity operating WazirX.

Binance issued the statement hours after the Enforcement Directorate (ED) on Friday said it had frozen bank balances of Rs 64.67 crore belonging to WazirX, adding that the premises of a director of the company, Zanmai Labs, was searched on Wednesday. The ED said it had found evidence against the company while investigating non-banking financial companies (NBFC) and their fintech partners indulging in predatory lending practices.

According to the ED, these Chinese loan lending companies that were shut down in India diverted their funds through crypto exchanges, and the maximum amount of funds was diverted to the WazirX exchange.

“Earlier, their managing director, Mr Nischal Shetty, had claimed that WazirX is an Indian exchange which controls all the crypto-to-crypto and INR-to-crypto transactions and only has an IP and preferential agreement with Binance. But now, Zanmai claims that they are involved in only INR-to-crypto transactions and all the other transactions are done by Binance on WazirX. They are giving contradictory and ambiguous answers to evade oversight by Indian regulatory agencies,” the ED statement said.

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In a tweet posted today, Shetty, co-founder, WazirX,  said, “WazirX was acquired by Binance, Zanmai Labs is an India entity owned by me & my co-founders, Zanmai Labs has license fr[o]m Binance to operate INR-crypto pairs in WazirX, Binance operates crypto to crypto pairs, processes crypto withdrawal.”

However, this didn’t go well with Binance CEO Changpeng Zhao, who was quick to respond that “Binance has never – at any point – owned any shares of Zanmai Labs, the entity operating WazirX.” It should be noted that on November 21, 2019, Binance published a blog post stating that it had “acquired” WazirX. However, “this transaction was never completed,” as per a tweet from Zhao.

According to Zhao, “Binance only provides wallet services for WazirX as a tech solution. There is also integration using off-chain transactions, to save on network fees. WazirX is responsible for all other aspects of the WazirX exchange, including user sign-up, KYC, trading and initiating withdrawals.”

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The Twitter feud between Shetty and Zhao has puzzled investors and crypto enthusiasts.

Shetty further said that Binance even owns WazirX domain name, and has root access to AWS servers, all the crypto assets and has all the crypto profits,” asserting that Binance is the rightful owner of the exchange.

Responding to Shetty’s tweet, Zhao said “WazirX domain is transferred to our control. We were given shared access to an AWS account. We could shutdown WazirX. But we can’t because it hurts users. The deal was never closed. No share [trans]fers.”

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However, Shetty was quick to point out that accepting “We could shut down WazirX”  proves Binance has control.  He said Binance has the root access of AWS. “Anyone with root access controls AWS,” adding that “the only control now is Zanmai, why are you not taking it?”.

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First published on: 06-08-2022 at 01:01:03 pm

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