Binance Terminates Wallet Services For Indian Crypto Partner WazirX, Asks It To Withdraw Funds

Feb. 3, 2023
Binance Terminates Wallet Services For Indian Crypto Partner WazirX, Asks It To Withdraw Funds

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.

Binance stated:

“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.

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.

Meanwhile, WazirX has laid off 40% of its workforce due to a crypto winter triggered by India’s harsh taxes and the collapse of FTX.

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.

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.”

Syed Ali Haider

Researcher & Editor
Ali Haider is a Blockchain enthusiast and writer passionate about enhancing the acceptance, adoption, and integration of Blockchain technology worldwide. He has also advocated for digital freedom and cybersecurity for many years.