Hours after the Enforcement Directorate (ED) said on August 5 that it has frozen bank assets of WazirX worth Rs 64.67 crore, Binance CEO Changpeng Zhao entered into a twitter war with WazirX founder & CEO Nischal Shetty.
Shocking revelation: Binance claimed that it never owned WazirX. The acquisition of WazirX by Binance was understood to be closed back in 2019 after Binance had posted a blog announcing the same.
CZ said on August 5 that the company does not own Indian crypto exchange WazirX, a deal that was understood to be completed back in 2019.
Zhao tweeted, “Binance does not own any equity in Zanmai Labs, the entity operating WazirX and established by the original founders.”
“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,” he wrote.
Another tweet by him claimed: “Binance only provides wallet services for WazirX as a tech solution. There is also integration using off-chain tx, to save on network fees. WazirX is responsible all other aspects of the WazirX exchange, including user sign-up, KYC, trading and initiating withdrawals.”
He tweeted, “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.”
A user retweeted an old tweet by CZ — Nice U turn…
Although, he himself tweeted a news in the past which mentioned WazirX a Binance owned company. “Binance-owned Indian crypto exchange WazirX crosses $200m in daily trading volume; eyes $1b in 2021 – The Financial Express”
The understanding was that the deal had been closed after Binance published a blog in 2019 saying it had acquired WazirX. Zhao; however, said that the transaction was never completed.
“Binance only provides wallet services for WazirX as a tech solution. There is also integration using off-chain tx, to save on network fees. WazirX is responsible for all other aspects of the WazirX exchange, including user sign-up, KYC, trading, and initiating withdrawals,” he tweeted.
“Binance only provides wallet services for WazirX as a tech solution. There is also integration using off-chain tx, to save on network fees. WazirX is responsible for all other aspects of the WazirX exchange, including user sign-up, KYC, trading, and initiating withdrawals,” he tweeted.
However, he tweeted few points which seemed contradictory.
He said, “WazirX domain is transferred to our control. We were given a shared access to an AWS account. We could shutdown WazirX.”
Why such access can be provided to a company which is a competitor and has no business relation with the other company?
In another tweet he clarified: “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.
“The WazirX founding team maintained control of the operations of the platform. We (Binance) were never give data or control of users, KYC, etc. We would love to work with ED to fix these issues in WazirX,” stated CZ.
To this Nischal replied: “WazirX was acquired by Binance. Zanmai Labs is an India entity owned by me & my co-founders, and Zanmai Labs has license from Binance to operate INR-Crypto pairs in WazirX, while Binance operates crypto to crypto pairs, processes crypto withdrawal…”
Nischal said: “You can check this fact by going to the TOS of WazirX
HE added: “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 replied to CZ.
In a reply to a user, Nischal confirmed: “WazirX is still owned by Binance.”
The central agency took action against the WazirX Director for assisting the accused instant loan app companies in the laundering of fraud money via the purchase and transfer of virtual crypto assets.
Both companies had not disclosed the amount of the deal in 2019. In the blog post announcing the acquisition in 2019, Binance had said that by the first quarter of 2020, WazirX’s auto-matching engine was to be integrated into the Binance Fiat Gateway. The integration would have paved way for Binance users to to purchase Tether (USDT) against the Indian Rupee.
Last week, the Ministry of Finance told the Rajya Sabha that the ED is investigating two cases against WazirX under the provisions of Foreign Exchange Management Act, 1999 (FEMA). The ministry added that Zanmai Labs, which operates WazirX, was using the walled infrastructure of Binance.
The Directorate of Enforcement, generally referred as Enforcement Directorate (ED), is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India. It is part of the Department of Revenue, Ministry of Finance, Government Of India.