Binance CEO Clears the Air on Involvement With Frozen Exchange WazirX

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Binance CEO Chang­peng Zhao (CZ) has pro­vid­ed clar­i­fy­ing details on its rela­tion­ship with WazirX – the cryp­to exchange whose assets were recent­ly frozen by Indi­an regulators. 

While Binance was indeed part­nered with the firm, CZ said it held no equi­ty in WazirX’s oper­a­tor Zan­mai Labs. 

What’s the Deal Between Binance and WazirX?

In a Twit­ter thread from the CEO on Fri­day, CZ acknowl­edged one of Binance’s blog posts from 2019 stat­ing that the exchange had “acquired” WazirX. How­ev­er, he claimed that the trans­ac­tion was “nev­er completed.”

“Binance has nev­er – at any point – owned any shares of Zan­mai Labs, the enti­ty oper­at­ing WazirX,” he re-asserted.

He added that Binance “only” offers a wal­let ser­vice to WazirX, and an off-chain trans­ac­tion solu­tion to help users save mon­ey on net­work fees. Respon­si­bil­i­ty for all oth­er areas of the exchange – includ­ing with­drawals, trans­ac­tions, and KYC – was attrib­uted to the com­pa­ny itself.

On the oth­er hand, Nis­chal Shet­ty – the founder of WazirX – said the sto­ry was more com­pli­cat­ed than that in a pair of fol­low-up tweets. He claimed that WazirX was acquired by Binance, and is still owned by the world-lead­ing exchange today. “Binance oper­ates cryp­to to cryp­to pairs [and] process­es cryp­to with­drawals” he added.

He also said that Binance owns WazirX’s domain name, has root access to its AWS servers, and holds all of WazirX’s cryp­to assets and prof­its. “Don’t con­fuse Zan­mai and WazirX,” he continued.

WazirX’s Trouble With the Law

In a press release from India’s Enforce­ment Direc­torate (ED) on Fri­day, the agency revealed that it had raid­ed prop­er­ties con­nect­ed to Zan­mai Labs direc­tor Sameer Mha­tre. It also froze WazirX’s bank bal­ances worth $8.1 million. 

The ED claimed to be inves­ti­gat­ing sev­er­al fin­tech com­pa­nies for mon­ey laun­der­ing and preda­to­ry lend­ing prac­tices. Appar­ent­ly Wazir X “active­ly assist­ed around 16 accused fin­tech com­pa­nies in laun­der­ing the pro­ceeds of crime using the cryp­to route.”

By the agency’s account, Zan­mai Labs is indeed the own­er of WazirX. How­ev­er, it has cre­at­ed a web of agree­ments with mul­ti­ple oth­er com­pa­nies, includ­ing Binance, in order to obscure that fact. 

While at times it has claimed that WazirX han­dles all trans­ac­tions con­duct­ed at the exchange, it has sug­gest­ed that Binance is respon­si­ble for cryp­to to cryp­to trans­fers at others. 

“They are giv­ing con­tra­dic­to­ry & ambigu­ous answers to evade over­sight by Indi­an reg­u­la­to­ry agen­cies,” claimed the ED.

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