Binance Distances Itself From India’s Crypto Exchange WazirX

Binance’s chief said Friday his firm never finalized a deal to acquire crypto exchange WarzirX more than two years ago, days after the platform was accused of evading oversight by India’s regulatory agencies.

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

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

That’s despite the deal, at the time, having been made public from both Binance and WazirX, which purported to allow users to buy and sell crypto with Indian rupees (INR) on the Binance Fiat Gateway.

WazirX’s co-founder Nischal Shetty disputes Zhao’s claims in what has erupted into an online tit-for-tat fued between the exchanges’ founders.

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

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

The exchange touts itself as the country’s “largest” crypto exchange with around 31.7 million users, roughly eight million behind another major Indian exchange CoinDCX’s 40 million recorded in March. Binance, the country’s fourth largest exchange, garners roughly 27.6 million users, according to Business Insider India.

A closer look by regulators

An investigation by the ED, made public last week, said it found large amounts of funds were diverted from questionable non-bank financial institutions and their fintech partners to WazirX which were then laundered “abroad” following a criminal investigation of those institutions and partners’ “predatory lending practices.”

Domestic Indian publication Business Standard first reported on the investigation.

The agency is accusing Zanmai of creating a “web of agreements” with social media management tool Crowdfire, another company founded by Shetty, Singapore holding company Zettai and Binance’s Cayman Islands entity to obscure ownership of WarzirX, according to a statement Friday.

The ED has issued a freeze on Zanmai director Sameer Mhatre’s bank balances worth INR 646,700,000 ($8.1 million) over an alleged failure to cooperate with the agency in determining the transactions relating to the crypto assets, “purchased from the proceeds of crime.”

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

The exchange is accused of giving “contradictory and ambiguous” answers to “evade” regulatory oversight from Indian authorities.

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

WazirX and a spokesperson for Zhao did not immediately return a request for comment.

Source: blockworks.co