Pushing crypto adoption isn’t easy: Binance CEO Changpeng Zhao

On August 8, Binance announced that it was ending off-chain financial transfers with WazirX, which is under investigation for sending cryptocurrency assets worth ₹2,790 crore to unidentified wallets.

Also read: The WazirX-Binance Connection: A Timeline of Events as They Unfolded

On August 5, the Enforcement Directorate (ED) announced that – as part of an ongoing money laundering investigation into various fake smartphone-based loan distribution apps “backed by” Chinese funds – it had frozen bank deposits of ₹64.67 crore made by WazirX.

“To provide clarity and protection for users, we are removing the off-chain transfer channel between WazirX and Binance,” Patrick Hillmann, Chief Communications Officer, Binance, said in a statement.

Also read: Crypto, rupee withdrawals processed normally, WazirX says after ED raid

Binance will no longer enable off-chain financial transfers between the WazirX exchange and Binance using the “Login with Binance” option as of August 12, 2022, at 09.00 am (India time), the statement said.

Users will still be able to deposit and withdraw using the usual methods between Binance and WazirX, the company added. Off-chain transactions are those that occur apart from the bitcoin network’s blockchain.

Also read: Cryptos appeal not to die despite volatile markets, macro risks, tax rules

The ED said it conducted raids against Sameer Mhatre, a director of Zanmai Lab Pvt Ltd, (which owns WazirX) on August 3 when he did not provide information sought from him and was “non-cooperative”.

The federal agency said in a statement that the exchange and its executives “gave contradictory and ambiguous answers to avoid oversight by Indian regulatory agencies”.

The agency said it found that a number of fintech companies involved in “predatory lending” through mobile apps in the country “diverted maximum amounts of funds to the WazirX exchange, and crypto-assets purchased in this way have been diverted to unknown foreign wallets ».

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It has come to notice that some users were led to believe that funds deposited into WazirX were managed by Binance, but this is not the case, the global crypto exchange said.

“Going forward, Binance will support Indian regulators in the ongoing proceedings regarding WazirX. Binance believes in maintaining an open dialogue with regulators, policy makers and the law enforcement community as we jointly seek to establish a global regulatory framework for the industry,” it said.

Minister of State for Finance Pankaj Chaudhary said in a reply to Parliament that a notice has been issued under FEMA provisions against WazirX for allowing outbound transfer of crypto assets worth ₹2,790 crore to unknown wallets.

Furthermore, in another case, it has been noticed that WazirX has allowed foreign users’ request to convert one crypto to another on its own platform, as well as using transfer from third-party exchanges, namely FTX, BINANCE, etc, he said.

(With PTI inputs)

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