All You Need to Know about Binance and Indian Exchange Wazirx’s Clash

All You Need to Know about Binance and Indian Exchange Wazirx’s Clash

Binance denied partnership with WazirX shortly after India froze its assets. As reported by Voice Of Crypto, on August 5, Indian authorities decided to freeze the assets of WazirX, a domestic crypto exchange, to investigate suspected violations of foreign exchange rules. 

WazirX is a trading platform acquired by Binance, the world's largest cryptocurrency exchange, in 2019. But on the evening of August 6, Changpeng Zhao, CEO of Binance, sparked controversy with a shocking statement: "Binance never acquired WazirX."

2/ 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.

— CZ 🔶 Binance (@cz_binance) August 5, 2022

Accordingly, the CEO of Binance admitted that he had reached an investment agreement with Zanmai Labs, the company behind WazirX, but the equity transfer was never made. CZ also affirmed that the two sides only have a technical support relationship. Binance provides a wallet service for WazirX and helps reduce transaction fees. WazirX controls its exchange management, including user registration, KYC, and deposits.

The Binance CEO wrote that he was "concerned" about reports that authorities were investigating WazirX and how Zanmai Labs was operating the exchange. He pledged to cooperate with Indian authorities on the investigation.

4/ Recent allegations about the operation of WazirX and how the platform is managed by Zanmai Labs are of deep concern to Binance. Binance collaborates with law enforcement agencies all around the world. We would be happy to work with ED in any way possible.

— CZ 🔶 Binance (@cz_binance) August 5, 2022

Binance & WazirX Controversy

Soon after, Nischal Shetty, founder of WazirX, refuted Mr. Changpeng Zhao's claims. Specifically, this person wrote on Twitter:

1/ FACTS about WazirX & Binance:

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…

— Nischal (Shardeum) ⚡️ (@NischalShetty) August 5, 2022


You can check this fact by going to the TOS of WazirX

More facts about WazirX:

• Binance owns WazirX domain name
• Binance has root access of AWS servers
• Binance has all the Crypto assets
• Binance has all the Crypto profits

Don't confuse Zanmai and WazirX

— Nischal (Shardeum) ⚡️ (@NischalShetty) August 5, 2022

Shortly after, the CEO of Binance responded:

It hurts users.

Binance does NOT have control on operations including "user sign-up, KYC, trading and initiating withdrawals", as stated earlier. WazirX's founding team controls that. This was never transferred, despite our requests. The deal was never closed. No share xfers.

— CZ 🔶 Binance (@cz_binance) August 5, 2022

Mr. Changpeng Zhao wrote that in the 3 years since signing the agreement, Binance has repeatedly asked WazirX to hand over control, but that has not happened. Binance has chosen not to announce the delay in the deal due to confidentiality provisions.

Mr. Nischal Shetty wrote:

Happy to solve it publicly so everyone is aware. Transparency wins

In this tweet you're saying you want control of sign ups & KYCs

But that part is run by Zanmai India through a license by Binance

Are you open to closing deal by acquiring Zanmai India then?

Let's solve it✌️

— Nischal (Shardeum) ⚡️ (@NischalShetty) August 5, 2022

Changpeng Zhao then warned users:

If you have funds on WazirX, you should transfer it to Binance. Simple as that.

We could disable WazirX wallets on a tech level, but we can't/won't do that. And as much debates as we are enduring, we can't/won't hurt users. 🙏

— CZ 🔶 Binance (@cz_binance) August 5, 2022

Wazirx Partnership Timeline

Based on the information available to the public

  • In November 2019, Binance announced the acquisition of WazirX. Binance will provide a wallet platform and allow WazirX users to buy crypto with Indian rupees and trade other cryptocurrencies.

#Binance Acquires India's Leading Digital Asset Platform @WazirXIndia to Launch Multiple Fiat-to-Crypto Gateways

— Binance (@binance) November 21, 2019

  • The agreement also included a provision to transfer management of WazirX to Binance. However, according to CZ's statement, WazirX only handed over the domain name and access to the AWS server, not letting the exchange control registration, KYC, and withdrawals.
  • During this time, Binance still promotes WazirX in the eyes of the public as a 100% owned platform. Changpeng Zhao also shared articles claiming WazirX as their subsidiary.

» Binance-owned Indian crypto exchange WazirX crosses $200m in daily trading volume; eyes $1b in 2021 – The Financial Express

— CZ 🔶 Binance (@cz_binance) April 5, 2021

  • On August 5, 2022, WazirX was frozen by Indian authorities to investigate allegations of money laundering. CZ stated that he does not control 100% of WazirX operations, the most important aspects are still managed by Zanmai Labs, and they refused to hand them over to him for the past 3 years.

It can be seen that CZ is separating himself and disclaiming his responsibility towards WazirX, asserting no control over user registration, withdrawals, and KYC. The trick used by the world's largest crypto exchange is to blame Zanmai, the company that sold the ownership of WazirX to them.

Since the beginning of 2022, Binance has been constantly involved in accusations of negligence in customer verification, which aids in money laundering activities with a value of up to $2.35 billion and having "shady" relationships with Russia.

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