Close on the heels of ED searches on WazirX owner Zanmai Labs, the founder of US-based cryptoexchange Binance, Changpeng Zhao, a.k.a. CZ, claimed that his company doesn’t hold any stake in the Indian company, seen as an attempt to shrug off any role in the allegations surrounding WazirX.
WazirX has been shrouded in a massive controversy over the violation of the Foreign Exchange Management Act, 1999 (FEMA). The Enforcement Directorate (ED) has recently carried out searches on one of the directors of Zanmai Labs and seized bank deposits of the company totaling Rs 64.67 crore.
On Wednesday, Minister of State for Finance Pankaj Chaudhary told the Rajya Sabha that WazirX has been served with an ED notice for two cases it is investigating under the FEMA Act.
Following these developments, Binance owner Changpeng Zhao tweeted that his company does not own any equity in Zanmai Labs, the owner of WazirX. "On 21 Nov 2019, Binance published a blog post that it had “acquired” WazirX. This transaction was never completed. Binance has never - at any point - owned any shares of Zanmai Labs, the entity operating WazirX," Changpeng said in the tweet.
He further noted that Binance only provides wallet services to WazirX. There is also integration using off-chain tx 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.
Meanwhile, Nishchal Shetty, CEO of WazirX, tweeted that WazirX was acquired by Binance.
Zanmai Labs is an Indian entity owned by Shetty and other co-founders.
Zanmai Labs has a license from Binance to operate INR-Crypto pairs in WazirX. Binance operates crypto to crypto pairs, and processes crypto withdrawal, Shetty said.
"You can check this fact by going to the TOS of WazirX More facts about WazirX: Binance owns WazirX domain name, Binance has root access of AWS servers, Binance has all the crypto assets, and Binance has all the Crypto profits. Don’t confuse Zanmai and WazirX," he added.
Replying to Shetty's tweet, Binance’s CEO expressed sadness that these matters were debated on Twitter. "Binance provides wallet services for WazirX. WazirX domain is transferred to our control. We were given shared access to an AWS account. We could shut down WazirX," he added.
CZ further noted that Binance does not have control over operations of the platform, including "user sign-up, KYC, trading and initiating withdrawals", as stated earlier. WazirX's founding team controls that. "This was never transferred, despite our requests. The deal was never closed," he added.
Binance CEO noted that the WazirX founding team controls the operations of the platform. "We (Binance) were never given data or control of users, KYC, etc. We would love to work with ED to fix these issues in WazirX," he said.
According to the government, approximately 16 fintech companies that are under investigation for money laundering allegedly received "active" assistance from WazirX in diverting their alleged criminal gains through the use of cryptocurrencies.
Experts’ Views On The Controversy
CEO of CREBACO Global Sidharth Sogani said that he is disappointed to see the drama happening in the crypto industry. "Some exchanges are not only going bust, but now even the shareholders are refusing to say they own it," he said.
He further added that unfortunately, the consumer suffers the most. "Users have lost millions in exchange busts recently related to Celsius, Vauld, etc., and now the dilemma between Binance and WazirX," Sogani added.
