Ruholamin Haqshanas
Binance CEO Changpeng Zhao (CZ) recently denied claims that Binance owns the Indian crypto exchange WazirX. The statement came after India’s Enforcement Directorate (ED) launched an investigation of WazirX over alleged money laundering on instant loan apps and raided the properties of one of its directors.
WazirX Under Investigation Over Alleged Money Laundering
India’s ED has launched an investigation into WazirX over alleged money laundering on instant loan apps. WazirX “actively assisted around 16 accused fintech companies in laundering the proceeds of crime using the crypto route,” the ED said in a press release last week.
The Indian agency said that Zanmai Labs, the company owning WazirX, has obscured the ownership of the crypto platform through a “web of agreements.” The exchange also reportedly “failed to give the crypto transactions of the suspect fintech APP companies and reveal the KYC of the wallets.”
This led to the ED raiding properties related to Sameer Mhatre, a director of WazirX, who hasn’t cooperated with authorities. The ED said that he failed to disclose details of a transaction in March that involved the purchase of cryptocurrencies with proceeds that were gained from alleged fraud on instant loan apps.
“By encouraging obscurity and having lax AML norms, it has actively assisted around 16 accused fintech companies in laundering the proceeds of crime using the crypto route,” the ED said. Consequently, the agency said they have frozen $8.1 million in funds held by WazirX.
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CZ Denies Claims Binance Owns WazirX
Following the probe, CZ took to Twitter to reveal its relationship with the Indian crypto exchange. “Binance does not own any equity in Zanmai Labs, the entity operating WazirX and established by the original founders,” he said, claiming that the transaction for acquiring WazirX was never completed.
“Binance only provides wallet services for WazirX as a tech solution. 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.”
Subsequently, WazirX co-founder Nischal Shetty claimed that CZ was trying to muddle the situation by referring to Zanmai Labs. He said that Binance owns the WazirX domain name, has root access to AWS servers, has all the crypto assets, and also takes all the profits.
“WazirX was acquired by Binance. Zanmai Labs is an India entity owned by me & my co-founders. Zanmai Labs has license frm Binance to operate INR-Crypto pairs in WazirX. Binance operates crypto to crypto pairs, processes crypto withdrawal.”
In response, CZ said Binance does not have control over operations including “user sign-up, KYC, trading and initiating withdrawals,” claiming that the exchange’s founding team maintained control of the operations. He also asked users to withdraw their assets from WazirX and transfer them to Binance.
However, Shetty has reportedly said that he has the legal documents to prove that Binance controls all crypto-to-crypto trading and crypto deposits and withdrawals. Shetty also claimed that no user fund has been lost. He also refuted insolvency rumors, claiming that they are not short on money and that user funds are in the bank. He said:
“What is more important is solvency. We are not short on money. Would there be a delay in withdrawals if too many people come in at the same time? May or may not. But this can happen to any exchange. But our deposits have not been reduced.”
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About the author
Ruholamin Haqshanas is an accomplished crypto and finance journalist with over two years of experience writing in the field. He has a solid grasp of various segments of the FinTech space, including the decentralized iteration of financial systems (DeFi), and the emerging market for non-fungible tokens (NFTs). He is an active user of digital assets for remittances.
