The world’s largest crypto exchange Binance has stopped providing wallet services to WazirX, according to Feb. 3 blog post. The outcome follows a months-long public spat between WazirX founders Nischal Shetty and Binance CEO Changpeng Zhao (CZ) over ownership of WazirX’s operations and assets.
Binance said the company took action because Zanmai Labs, the entity operating the Indian crypto exchange, failed to clarify misrepresentations that Binance owned Zanmai’s WazirX operations. The company stated it just provided wallet services to WazirX.
Binance offered Zanmai a choice of two, either retract the false public statements and continue using the wallet services or stop using them. But they did not receive a satisfactory response, so the company asked Zanmai to withdraw any remaining funds in Binance wallets.
“Since Zanmai has refused to clarify their misleading statements, Zanmai has till 3 February 2023 (23:59 UTC) to remove the funds from the accounts that they used for WazirX’s operations.”
In a tweet on Friday, WazirX said it had started the fund transferring to multi-sig wallets and expected it to be completed within hours. Users’ assets are safe. However, they can withdraw, deposit, and trade funds as usual.
📢 We have initiated the process of transferring assets to multi-sig wallets, which we expect to be fully completed within the next few hours.
Users can continue to trade, deposit & withdraw funds as usual. Your funds are safe with us 🙏
— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) February 3, 2023
On January 11, WazirX announced that 90% of its users’ assets are in Binance-based wallets, while the remaining 10% are in hot and cold storage wallets. It is the largest cryptocurrency exchange in India by trading volume.
The company’s previous year report showed that annual trading volume exceeded $43 billion in 2021, up 1,735% from 2020.
Binance-WazirX Controversy Flashback
Binance declared the acquisition of WazirX in a blog post in November 2019. The official blog also featured photos of the two platform founders, as well as the excitement of Binance executives about the deal.
The 2019 publication stated that:
“The acquisition of WazirX shows our commitment and dedication to the Indian people and strengthen the blockchain ecosystem in India as well as another step forward in achieving the freedom of money.”
WazirX also reported this partnership in a separate blog post also.
The dispute between these two firms came to light on August 5, 2022, when the CEO of Binance tweeted that exchange does not own equity in Zanmai Labs.
Quick thread on Binance and WazirX, and some incorrect reporting.
Binance does not own any equity in Zanmai Labs, the entity operating WazirX and established by the original founders.
— CZ 🔶 Binance (@cz_binance) August 5, 2022
Zhao also stated:
“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.”
Meanwhile, Shetty insisted that Binance bought and owned the exchange.
Zhao’s remarks came moments after India’s Enforcement Directorate (ED) earlier in the day raided properties linked to Sameer Mhatre, co-founder and director of WazirX. The authorities found that Indian crypto firm facilitated 16 accused fintech companies in money laundering. However, the ED froze the roughly $8.1 million held by the crypto exchange.
In August, ED said:
“Despite giving repeated opportunities, WazirX failed to give the crypto transactions of the suspect fintech APP companies and reveal the KYC of the wallets.”