Zhao Denial, User Mistrust: Here’s What We Know About the WazirX-Binance Debacle So Far

India’s crypto community finds itself perplexed amid a heated Twitter feud between WazirX co-founder Nischal Shetty and Binance CEO Changpeng Zhao. WazirX, a household name among Indian crypto exchanges, is under investigation by India’s financial watchdog, the Enforcement Directorate (ED), over alleged predatory lending practices. According to investigating authorities, a group of Chinese lending companies, banned from operating in India, were using WazirX to transfer their funds internationally via cryptocurrencies.

On August 3, Minister of State for Finance Pankaj Chaudhary Told the Lok Sabha that the ED was investigating alleged money laundering of Rs 2,790 crore via WazirX.

After ED accused WazirX of illegal money laundering using cryptocurrencies, company co-founder Shetty allegedly said his exchange only has intellectual property and a preferential agreement with Binance because the US-based global exchange had acquired WazirX.

According to Chaudhary, “…the investigation so far revealed that WazirX, operated by Zanmai Labs Private Limited in India, was using the bricked-up infrastructure of the Cayman Islands-based exchange Binance. It was discovered that all crypto transactions between these two exchanges were not even recorded on the blockchains and were therefore shrouded in mystery.”

The CEO of Binance, which aims to obtain operational licenses worldwide, was quick to withdraw its association with WazirX, which is currently caught in a whirlwind of legal problems in India.

According to Zhao, the Wazirx acquisition transaction “was never completed.” Binance had however, in a November 2019 blog post claims that he had acquired WazirX.

Zhao claimed that Binance only provides crypto wallet services for WazirX.

While the WazirX team has promised full cooperation with ED’s investigation, they still have thousands of users to give legitimate justifications to.

Members of India’s crypto community called the unfolding of this debacle “shocking.”

So far, Rs. 64.47 crore in WazirX accounts have been frozen by ED.

Plans for the future conduct of this investigation are still awaited.

Founded in 2017, WazirX works under the umbrella of a four-year Indian non-governmental company called Zanmai Lab Pvt. ltd. The crypto exchange complaints have over six million registered users.

Binance, on the other hand, is an internationally established brand in the crypto industry with licenses operating in parts of the UAE, Europe, and the United States.

Last July, Binance Labs Chief Investment Officer Ken Li had Told Gadgets 360 in an interview that the company was actively monitoring the Indian market to seize lucrative business opportunities.


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