Zhao’s Denial, Users’ Distrust: Here’s What We Know About WazirX-Binance Debacle So Far

The ED is probing WazirX for its links with Chinese loan lending firms.

By Radhika Parashar | Updated: 6 August 2022 16:35 IST

Zhao’s Denial, Users’ Distrust: Here’s What We Know About WazirX-Binance Debacle So Far

Photo Credit: Unsplash

The ED has frozen Rs. 64.47 crore in the accounts of WazirX amid ongoing probe

Highlights

WazirX operated under Zanmai Lab Pvt. Ltd
ED raided Zanmai Lab facility on August 5
ED has accused WazirX of laundering money for Chinese loan apps

The crypto community of India finds itself perplexed in the backdrop of an ongoing heated Twitter feud between WazirX co-founder Nischal Shetty and Binance CEO Changpeng Zhao. WazirX, a known name among Indian crypto exchanges, is undergoing a probe from India's financial watchdog, the Enforcement Directorate (ED), over alleged predatory lending practices. As per the investigating authorities, a bunch of Chinese firms in the loan lending business, that were banned from operating in India, were using WazirX to wire their funds internationally via cryptocurrencies.

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

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

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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) :zap:️ (@NischalShetty) August 5, 2022

WazirX is still owned by Binance
— Nischal (Shardeum) :zap:️ (@NischalShetty) August 5, 2022

As per Chaudhary, “...investigation done so far has revealed that WazirX, operated by Zanmai Labs Private Limited in India was using the walled infrastructure of Cayman Island based exchange Binance. Further it has been found that all crypto transactions between these two exchanges were not even being recorded on the blockchains and were thus cloaked in mystery."

The CEO of Binance, who is aiming to bag operational licences around the world, was quick to withdraw its association with WazirX, that is currently caught in a whirlwind of legal troubles in India.

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As per Zhao, the transaction of acquiring Wazirx “was never completed”. Binance had however, in a November 2019 blog claimed that it had acquired WazirX.

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

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 :large_orange_diamond: Binance (@cz_binance) August 5, 2022

While the WazirX team has promised complete cooperation with ED's investigation, it still has thousands of its users to give legitimate justifications to.

Members from India's crypto community have called the unfolding of this debacle ‘shocking'.

Wazirx is not a Binance company it's something that's shocking for the industry.

Every single individual in the ecosystem was under the impression that Wazirx is a Binance company.

Investor trust is at its lowest!!
— Kashif Raza (@simplykashif) August 5, 2022

The promise of crypto security, transparency,freedom from centralisation& archaic regulation is busted everyday with skeletons falling from closets being opened by enforcement agencies but crypto bros will continue to lullabying about gov conspiring against them #WazirX #binance pic.twitter.com/jqNbLIbK1r
— Monica Jasuja (@jasuja) August 5, 2022

#WazirX fraud!

WazirX helped 16 fintech companies in laundering money through Crypto route, says Enforcement Directorate!

Assets frozen, investigation ongoing.

Claiming to be a top exchange, while doing shady business. Not good for Indian #crypto market.
— Aswin PS (@aswinps_ft) August 5, 2022

For now, Rs. 64.47 crore in the accounts of WazirX have been frozen by the ED.

ED searches the Director of WazirX Crypto-Currency Exchange & freezes its Bank assets worth Rs 64.67 Crore for assisting accused Instant Loan APP Companies in laundering of fraud money via purchase & transfer of virtual crypto assets.
— ED (@dir_ed) August 5, 2022

The plans of the future course of this investigation remains awaited.

Founded in 2017, WazirX works under the umbrella of a four-years-old Indian non-government firm called Zanmai Lab Pvt. Ltd. The crypto exchange claims to have over six million registered users.

Binance, on the other hand, is an internationally established brand in the crypto sector with operational licenses in parts of the UAE, Europe, and the US.

Back in July, Ken Li, the investment director at Binance Labs had told Gadgets 360 in an interview that the company was actively monitoring the Indian market to grab lucrative business opportunities.

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Further reading: Cryptocurrency, Binance, WazirX, Nischal Shetty, Changpeng Zhao

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More