Binance CEO Changpeng Zhao (CZ) has provided details clarifying his relationship with WazirX – the crypto exchange whose assets were recently frozen by Indian regulators.
While Binance was indeed a partner in the company, CZ said it does not hold any stake in WazirX’s operator, Zanmai Labs.
What is the deal between Binance and WazirX?
In a Twitter feed CEO on Friday, CZ acknowledged one of Binance’s blog posts from 2019 stating that the exchange had “acquired” WazirX. However, he claimed the deal was “never finalized”.
“Binance has never – at any time – held shares of Zanmai Labs, the entity operating WazirX,” he reiterated.
He added that Binance “only” offers a wallet service to WazirX and an off-chain transaction solution to help users save money on network fees. Responsibility for all other areas of the exchange – including withdrawals, transactions, and KYC – has been assigned to the company itself.
On the other hand, Nischal Shetty – the founder of WazirX – said the story was more complicated than that in a follow-up pair tweet. He claimed that WazirX was acquired by Binance and is still owned by the world’s top exchange today. « Binance Mines Crypto-to-Crypto Pairs [and] processes crypto withdrawals,” he added.
He also stated that Binance owns WazirX’s domain name, has root access to its AWS servers, and owns all of WazirX’s crypto assets and earnings. “Don’t confuse Zanmai with WazirX,” he continued.
WazirX’s problems with the law
In a Press release of India’s Law Enforcement (ED) Directorate on Friday, the agency disclosed that it had raided properties linked to Zanmai Labs director Sameer Mhatre. It also froze WazirX’s bank balances worth $8.1 million.
The ED claimed to be investigating several fintech companies for money laundering and predatory lending practices. Apparently, Wazir X “actively assisted approximately 16 accused fintech companies in laundering the proceeds of crime using the crypto route”.
According to the agency’s account, Zanmai Labs is indeed the owner of WazirX. However, it created a web of deals with several other companies, including Binance, to hide this fact.
While he has sometimes claimed that WazirX handles all transactions made on the exchange, he suggested that Binance is responsible for crypto-to-crypto transfers at others.
“They give contradictory and ambiguous answers to evade the scrutiny of Indian regulatory agencies,” the ED said.
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