YEREVAN (CoinChapter.com) — Binance, the world’s largest cryptocurrency exchange by volume, is in hot waters again. In a bizarre move that has left everyone in shock, Binance CEO Changpeng Zhao (CZ) has now claimed his firm does not own the Indian crypto exchange WazirX.
This “revelation” comes at a time when India’s Enforcement Directorate (ED) cracked the whip on WazirX. The economic watchdog has accused the exchange of abetting money launderers through its platform.
While Zhao posted a series of tweets backing his claim, WazirX founder Nischal Shetty disputed the Binance CEO’s post in a separate thread.
The Twitter spat has left industry players confused. Back in November of 2019, Binance posted a blog post announcing the acquisition of the Indian exchange.
“The acquisition of WazirX shows our commitment and dedication to the Indian people and strengthen the blockchain ecosystem in India as well as another step forward in achieving the freedom of money,”
Binance CEO ditches WazirX, NischalShetty hits back
On Friday, Zhao claimed Binance does not “own any equity in Zanmai Labs,” the company behind WazirX co-founded by Shetty.
Despite the company having announced purchasing WazirX, Changpeng Zhao claimed he wanted to clarify some “incorrect reporting.”
“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,”
According to Zhao, his company only provides wallet services to WazirX as part of a tech solution. He further indicated that Binance collaborates with law enforcement agencies globally and would do the same in India with the Enforcement Directorate (ED).
Hours later, the WazirX founder called Zhao’s bluff.
Posting his side of the story, Shetty confirmed that Binance does, in fact, own WazirX. He further clarified that his firm, Zanmi Labs, only has a license from Binance to operate INR-Crypto pairs in the exchange.
“WazirX was acquired by Binance… It (Binance) operates crypto to crypto pairs, processes crypto withdrawal…has all the Crypto profits,”
Enforcement Directorate (ED) freezes WazirX bank assets
The Enforcement Directorate (ED) of India announced on Friday it had issued an order to freeze the bank balances of WazirX after raiding the premises of one of the Directors of Zanmai Lab.
According to the ED, assets to the tune of Rs 64.67 crore (nearly $650 million) now stand frozen. The economic watchdog claims it has found evidence that the exchange helped some non-banking financial companies (NBFC) lauder funds abroad after they came under the scanner for flaunting RBI rules.
“It is seen that maximum amount of funds were diverted to WazirX exchange and the crypto-assets so purchased have been diverted to unknown foreign wallets,”
the ED alleged.
Moreover, the Enforcement Directorate’s accusations seem to match that of Zhao. Accusing Shetty of failing to cooperate and provide the necessary information, the authorities claimed he changed his story to avoid accountability.
“Earlier, their Managing Director Mr Nischal Shetty had claimed that WazirX only has an IP & preferential agreement with Binance. But now, Zanmai claims that they are involved in only inr-crypto transactions. All the other transactions are done by Binance on WazirX,”
As news spread, WRX, the native token of WazirX, tanked over 10%. Investors now seem apprehensive about the future of both the exchange as well as the currency.
With Binance ditching the crypto exchange and the ED freezing its assets, the token is likely to crush further, leaving investors in heavy losses.
However, the fight is only getting uglier. The Binance CEO has now urged all users, who own funds on WazirX, to transfer them to Binance.
Indicating that it could possibly disable the exchange’s wallets, Zhao hinted investors will be better off if they stop using the Indian crypto exchange.
People now view this as a muscle-flexing attempt as the two giants clash to avoid responsibility. However, as Shetty had explained the last month, Indian traders need to pay TDS to the Indian authorities if they trade on foreign exchanges.
It is unlikely, that many will risk taking their funds to Binance. Meanwhile, the entire cryptocurrency will be looking to see who, after all, owns WazirX.
UPDATE: Since the publication of this story, WazirX has come out to dispute the allegations made by the Enforcement Directorate. In a Tweet posted Saturday morning, the exchange claims it has cooperated with the authorities and answered all relevant questions in a transparent manner.
“We do not agree with the allegations in the ED press release. We are evaluating our further plan of action,” the crypto exchange announced.
Yerevan-based Editor and writer focusing on topics about cryptocurrencies, NFTs, politics, and international relations. Having completed his Bachelor's and Master's degrees from Delhi's Jawaharlal Nehru University, he currently works as a reporter at CoinChapter.
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