- Crypto exchange Binance recently denied owning the India-based crypto exchange WazirX, despite the company’s 2019 blog post saying otherwise.
WazirX, meanwhile, insists the deal is indeed done.
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 violated foreign exchange rules.
Changpeng Zhao, the founder of Binance, took to Twitter last Friday to address “some misreporting” and say that “Binance does not own any shares in Zanmai Labs, the entity that runs 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 time – owned any shares in Zanmai Labs.”
Binance first announced the acquisition of WazirX in November 2019 in a deal reportedly worth up to $10 million, with the accompanying blog post featuring a photo of the two platform executives showing their enthusiasm for the deal.
“The acquisition of WazirX shows our commitment and dedication to the Indian people and strengthens 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.
One on such an occasion last April CZ congratulated WazirX has crossed $200 million in daily trading volume.
However, as CZ claimed in a series of recent tweets, “Binance only offers wallet services for WazirX as a technical solution,” as well as an integration of off-chain transactions to save network fees.
According to the Binance CEO, WazirX is responsible for all other aspects of its operations, “including user registration, KYC, trading and withdrawal initiation.”
WazirX disputes CZ’s claim
However, the story was far from over as WazirX co-founder Nischal Shetty so— contrary to Binance’s chief claims — the acquisition deal did take place.
According to Shetty, Zanmai Labs is an India entity owned by him and other co-founders, which has a license from Binance to operate INR crypto pairs on WazirX.
Binance, on the other hand, 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, retaining all crypto assets and profits from crypto trades.
CZ denied having control over WazirX systems, claim that in February Binance asked the Indian exchange to transfer its system source code, distribution and operations. WazirX reportedly refused.
“WazirX has been uncooperative with us, and appears to be uncooperative with ED as well,” Zhao added.
He later confirmed that Binance has control over the WazirX domain, and even admitted that it could shut down WazirX, but won’t “because it hurts users.”
“Binance does NOT control operations including ‘user registration, KYC, trading and withdrawal initiation’, as mentioned earlier. WazirX’s founding team controls that,” CZ added.
WazirX ownership structure
However, the matter may seem complicated to an outsider, 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 required for WazirX to process rupee deposits and withdrawals.
“Then they are [Binance] proposed and we committed to use a device we own and we get a license from them to process rupee deposits and withdrawals,” he said. “That’s how Zanmai got the license for WazirX from Binance, and you can only give a license if you own it. That’s the proof that they had bought WazirX.”
According to Shetty, the crypto-to-crypto trading and crypto deposits and withdrawals on WazirX are owned directly by Binance, and you can get this information in the site’s terms and conditions. “
“We have a proper legal document of acquisition and a license to operate the rupee market in India. It’s just that we cannot share it at this stage,” Shetty said, adding that “WazirX as a product and a brand owned by Binance.”
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