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Crypto exchange Binance recently denied owning India-based crypto exchange WazirX, despite the company’s blog post from 2019 saying exactly the opposite.
WazirX, meanwhile, insists the deal has indeed been completed.
The dispute comes hot on the heels of last week’s reports that India’s Enforcement Directorate (ED) froze $8.14 million (64.67 Crore rupees) in assets from WazirX after the Mumbai-based company allegedly broke currency exchange regulations.
Changpeng Zhao, the founder of Binance, took to Twitter last Friday to address “some incorrect reporting” and state that “Binance does not own any equity in Zanmai Labs, the entity operating WazirX.”
Commenting on the 2019 announcement of Binance’s acquisition of WazirX, Zhao said that “this transaction was never completed” and that the company “has never – at any point – owned any shares of Zanmai Labs.”
2/ 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.
— CZ 🔶 Binance (@cz_binance) August 5, 2022
Binance first announced the acquisition of WazirX in November 2019 in a deal reportedly valued up to $10 million, with the accompanying blog post featuring an image of the two platform’s executives showing their enthusiasm over the deal.
"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,” Zhao said at the time.
Interestingly, Zhao has since referred to WazirX as a “Binance-owned” entity.
On one such occasion in April last year CZ congratulated WazirX on crossing $200 million in daily trading volume.
» Binance-owned Indian crypto exchange WazirX crosses $200m in daily trading volume; eyes $1b in 2021 – The Financial Express https://t.co/t3GD7UwvYt
— CZ 🔶 Binance (@cz_binance) April 5, 2021
However, as CZ claimed in a series of recent tweets, “Binance only provides wallet services for WazirX as a tech solution,” as well as an integration of off-chain transactions to save on network fees.
According to Binance CEO, WazirX is responsible for all other aspects of its operations, “including user sign-up, KYC, trading and initiating withdrawals.”
3/ Binance only provides wallet services for WazirX as a tech solution. There is also integration using off-chain tx, to save on network fees. WazirX is responsible all other aspects of the WazirX exchange, including user sign-up, KYC, trading and initiating withdrawals.
— CZ 🔶 Binance (@cz_binance) August 5, 2022
The story was far from over, however, as WazirX co-founder Nischal Shetty said—contrary to the Binance boss's claims—that the acquisition deal took place.
According to Shetty, he and his co-founders own Zanmai Labs, which has a license from Binance to operate INR-crypto pairs on WazirX.
Binance, in turn, operates WazirX’s crypto-to-crypto pairs and processes crypto withdrawals.
Shetty added that Binance also owns the WazirX domain name and has root access to the exchange’s AWS servers, keeping all crypto assets and profits from crypto trades.
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) ⚡️ (@NischalShetty) August 5, 2022
CZ denied having control over WazirX systems, claiming that in February Binance requested the Indian exchange to transfer system source code, deployment and operations. WazirX allegedly refused.
“WazirX has been uncooperative with us, and looks like uncooperative with ED as well,” added Zhao.
He later confirmed that Binance does have control over the WazirX domain, and even admitted it could shut down WazirX, but won’t do it “because 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,” added CZ.
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 🔶 Binance (@cz_binance) August 5, 2022
The matter may seem complicated to an outsider, however, in an interview with MoneyControl Shetty explained that the acquisition deal took place amid a banking ban imposed by the Reserve Bank of India on local crypto exchanges.
After the ban was lifted, an Indian entity was needed for WazirX to process rupee deposits and withdrawals.
“That is when they [Binance] suggested and we obliged that we use an entity we own and we get a license from them for processing rupee deposits and withdrawals,” he said. “That is how Zanmai got the license for WazirX from Binance and you can only give a license if you own it. That is proof they had acquired WazirX.”
According to Shetty, the crypto-to-crypto trading and crypto deposits and withdrawals at WazirX “are directly owned by Binance and you can get this information in the terms and conditions of the website. “
“We have a proper legal document of acquisition and a license to operate the rupee market in India. It is just that we can’t share it at this stage,” said Shetty, adding that “WazirX as a product and a brand is owned by Binance.”
