Following regulatory examination, Binance denied having any equity participation in the cryptocurrency exchange with headquarters in India.
Off-chain fund transfers between Binance and Indian cryptocurrency exchange WazirX are expected to be discontinued on Thursday, according to a report published on Monday by regional news source The Economic Times. Users will still be able to deposit and withdraw funds using the normal withdrawal and deposit procedures between the two exchanges.
WazirX’s bank balances totaling $8.1 million connected to the exchange were frozen after The Directorate of Enforcement of India said that the exchange “actively assisted around 16 accused fintech companies in laundering the proceeds of crime using the crypto route.”
The ownership of the exchange by Binance is a subject of continuing debate at the same time. The CEO of Binance, Changpeng Zhao (CZ), stated last Friday that WazirX’s parent company Zanmai Labs is not a company that Binance owns any equity in. He also made it clear that the rumored Nov. 21, 2019, acquisition of WazirX by Binance was never finalized.
Zhao, however, retweeted the following quote from The Financial Express in a tweet from April 5, 2021:
“Binance-owned Indian crypto exchange WazirX crosses $200 million in daily trading volume; eyes $1 billion in 2021.”
Nischal Shetty, the founder of WazirX, stated in a related article that WazirX was acquired by Binance, with the latter engaged in activities including processing cryptocurrency withdrawals and trading crypto-to-crypto pairs. Shetty further asserted that Binance was the domain name owner of WazirX, that it had complete access to the company’s servers, and that it was in charge of all of WazirX’s crypto assets and trading gains.
Such assertions have been categorically refuted by Binance CEO CZ, who said:
“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 for all other aspects of the WazirX exchange, including user sign-up, KYC, trading and initiating withdrawals.”
Recently, WazirX has become involved in a number of controversies. Due to claims of failures in anti-money laundering, India’s Enforcement Directorate was already looking into the exchange last year. After discovering GST fraud on trade commissions earlier this year, government representatives from the Central GST and Central Excise committee were able to recover $6.62 million from the exchange.