Binance distances itself from India's crypto exchange WazirX

Binance distances itself from India's crypto exchange WazirX

Binance's boss said on Friday his company never made a deal to acquire crypto exchange WarzirX more than two years ago, days after the platform was accused of evading oversight by Indian regulators.

CEO Changpeng “CZ” Zhao said in a Tweet thread the November 2019 deal “was never completed” and Binance only offers “wallet services for WazirX as a technical solution.”

“WazirX is responsible [for] all other aspects of the WazirX exchange, including user registration, [know-your-customer solutions]trading and initiating withdrawals,” Zhao said.

And this despite the fact that the deal was made public by both parties Binance and WazirX which allegedly allowed users to buy and sell crypto with Indian Rupees (INR) on the Binance Fiat Gateway.

WazirX co-founder Nischal Shetty disputes Zhao's claims amid a dispute between the exchange's founders.

“WazirX was acquired by Binance” Shetty tweeted, less than two hours after Zhao publicly distanced Binance from the exchange. “Binance operates crypto-to-crypto pairs and processes crypto withdrawal[s].”

WazirX has drawn the ire of the Directorate of Enforcement (ED), the country's financial regulator, over allegations that the exchange's operator, Zanmai Labs, facilitated money laundering on the exchange.

The exchange describes itself as the country's "largest" crypto exchange with around 31.7 million users, around eight million behind the 40 million recorded by another major Indian exchange, CoinDCX, in March. Binance, the fourth largest exchange in the country, has around 27.6 million users Business Insider India.

A closer look from regulators

A determination by the ED, released last week, said it found that large amounts of funds were diverted to WazirX from questionable non-bank financial institutions and their fintech partners, which were then laundered "abroad" following a criminal investigation into these institutions and partners' lending practices."

Domestic Indian release Business standard reported the investigation for the first time.

The agency accuses Zanmai of creating a "web of arrangements" with social media management tool Crowdfire, another company founded by Shetty, Singapore holding company Zettai and Binance's Cayman Islands unit, to conceal ownership of WarzirX, according to a Statement Friday.

The ED has frozen the bank balances of Zanmai director Sameer Mhatre worth INR 646,700,000 (US$8.1 million) over an alleged failure to cooperate with the agency in investigating the transactions related to the crypto assets "acquired from the proceeds of crime."

Shetty previously claimed that WazirX controls all crypto-crypto and INR-based crypto transactions with only intellectual property and a preferential agreement with Binance. Zanmai now claims that they are only involved in INR-based crypto transactions, while all other Binance transactions are settled on WarzirX, the agency said in its statement.

The exchange is accused of providing “contradictory and ambiguous” responses in order to “evade” the Indian authorities’ regulatory oversight.

“Recent allegations about WazirX’s operations and how the platform is managed by Zanmai Labs are of great concern to Binance,” Zhao said. “Binance works with law enforcement agencies around the world. We would be happy to work with ED in any way possible.”

WazirX and a spokesman for Zhao did not immediately respond to a request for comment.

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The post Binance distances itself from India's crypto exchange WazirX is not financial advice.