WazirX Sets Up Panama Entity To Escape Singapore Crypto Noose

Singapore is set to enforce the FSM Act 2022 this month to make the regulatory framework stricter for digital token services

WazirX informed the apex court of Singapore that it is in the process of transferring the crypto-related services to a subsidiary incorporated outside Singapore

Panama has relaxed regulator rules around cryptos. Zensui (WazirX) hopes to see smoother operations there and provide uninterrupted service to its users

Nearly a year after a cyber attack wiped out nearly $235 Mn from one of its wallets, Indian crypto exchange WazirX has incorporated an entity in Panama by the name of Zensui Corporation, to continue with its crypto operations without a mandatory Singapore licence.

The move follows Singapore tightening the regulatory noose around crypto transactions. The city state is set to implement the Financial Services and Markets (FSM) Act, 2022 from June 30. 

This stricter regulatory framework for digital token services will make it significantly harder for companies to operate crypto businesses without a special licence from the Monetary Authority of Singapore (MAS).

WazirX also informed the court that the company is in the process of transferring the platform’s crypto-related services to a subsidiary incorporated outside Singapore.

“Zettai (Zettai Pte Ltd is the Singapore entity of the crypto exchange) has taken steps to incorporate a subsidiary, Zensui Corporation in the Republic of Panama, and has been preparing for the transfer of the operations of the platform’s cryptocurrency-related services to Zensui, if necessitated by changes in the regulatory landscape,” the company told the Singapore Supreme Court in a filing. 

Panama is known for its comparatively relaxed stance on crypto regulations. Zensui (read WazirX) is likely to have smoother operations there with easier regulatory compliances, and provide uninterrupted service to its users.

In the filing with the Singapore Supreme Court, WazirX stated that Zettai has no plans to register with the Financial Intelligence Unit of India (FIU-IND) for WazirX operations.

It said that Zanmai India, which is the Indian entity of WazirX, is registered with the FIU-IND and manages all compliance obligations. It said that as of July 2024 (post-hack), no notices, penalties, or warnings were issued to Zettai or Zanmai India by FIU-IND for non-registration. 

The FIU-IND has not raised any objection or issue on the matter so far, and Zettai has not received any communication from the FIU-IND on the requirement to register, the company affirmed. 

WazirX suffered a major hack with nearly $235 Mn, or around 45% of its total reserves, being siphoned out of the system last July. The attack was allegedly linked to the North Korean Lazarus Group, notorious for high-profile crypto heists. 

Following the breach, WazirX suspended trading and withdrawals, sparking panic among users, regulatory scrutiny, and affecting nearly 4.4 Mn Indian users.

To repay investors, the company proposed a court-supervised restructuring plan, which has been approved by over 75% of creditors. However, repayments will be based on the current crypto values, and not that of the time of the hack. WazirX has so far recouped $3 Mn of stolen assets as it continued with the recovery process.

The WazirX hack and incidents such as the BitBNS Exchange issues and the 2021 Morris Coin scam continue to hamper broader cryptocurrency adoption in India. 

The government too has imposed a 1% TDS on crypto transactions and a 30% tax on digital asset gains – the highest in the world – and placed crypto earnings in the same bracket with gambling and lottery.

The setbacks, however, couldn’t slam the brakes on crypto adoption in India, making it one of the top countries on the crypto landscape in 2024.

The Supreme Court has questioned the Centre’s delay in rolling out regulations for cryptocurrencies and digital assets, citing potential economic risks. Recent reports suggest that the government is preparing to release a detailed discussion paper on crypto policy options later this month.