A major Indian cryptocurrency exchange, Wazirx, had its banking assets worth over $ 8 million frozen by the Directorate of Enforcement (ED). The exchange was allegedly acquired by Binance in 2019. However, Binance CEO Changpeng Zhao (CZ) now says the acquisition “was never completed”. Wazirx, on the other hand, claims it was acquired by Binance.
ED’s action against Wazirx
India’s Application Directorate (ED) released a press release on Friday regarding Wazirx, a major cryptocurrency exchange in India. ED is a law enforcement and economic intelligence agency of the Indian government. Details of the announcement:
The Directorate of Enforcement (ED) conducted research on one of the directors of M / s Zanmai Lab Pvt Ltd, which owns the popular cryptocurrency exchange Wazirx and issued a freeze order to freeze its bank balances in the amount of INR 64. , 67 crore.
ED said this action is part of its investigation into money laundering against non-bank financial corporations (NBFCs) and their fintech partners for “predatory lending practices in violation of the RBI. [Reserve Bank of India] guidelines”.
The announcement describes: “ED found that large amounts of funds have been hijacked by fintech companies to buy crypto assets and then launder them overseas. These companies and virtual assets are untraceable at the moment.”
ED said Zanmai Labs has created a network of deals with Crowdfire Inc. (USA), Binance (Cayman Island) and Zettai Pte Ltd. (Singapore) “to obscure Wazirx ownership.” The authority further said that Wazirx provided “contradictory” and “ambiguous” responses “to evade oversight of Indian regulatory agencies,” noting that the exchange did not provide crypto transactions from suspicious fintech companies.
“Due to the non-cooperative position of the director of the Wazirx exchange, a search operation was conducted,” ED pointed out. “It was found that Mr. Sameer Mhatre, director of Wazirx, has full remote access to the Wazirx database, but nevertheless does not provide transaction details related to crypto assets, purchased from the crime proceeds of Instant Loan Fraud APP. “Law enforcement also have stated:
Lazy KYC regulations, loosened regulatory scrutiny of transactions between Wazirx and Binance, failure to record transactions on blockchain to save costs and KYC failure to record opposing wallets ensured that Wazirx is unable to account for missing assets. cryptographic. He made no effort to track these crypto assets.
“By encouraging obscurity and having lax money laundering regulations, he actively assisted around 16 fintech companies accused of laundering the proceeds of crime using the cryptocurrency route. Thus, movable assets equivalent to the extent of Rs. 64.67 million. [$8.14 million] lying with Wazirx were frozen, “ED’s announcement concludes.
Binance statements on the acquisition of Wazirx
After seeing media reports on his exchange mentioned in connection with Wazirx, Binance CEO Changpeng Zhao (CZ) he has declared on Twitter that his company “has no stake in Zanmai Labs”.
On November 21, 2019, Binance published a blog post claiming it had “acquired” Wazirx. This transaction was never completed. Binance has never – at any time – owned shares in Zanmai Labs, the entity that manages Wazirx.
“Binance provides wallet services for Wazirx only as a technology solution. There is also integration via off-chain tx, to save on network fees. Wazirx is responsible for all other aspects of the Wazirx exchange, including user registration, KYC, trading and initiating withdrawals, ”explained CZ.
“The recent allegations about the operation of Wazirx and how the platform is managed by Zanmai Labs are a source of deep concern for Binance. Binance works with law enforcement agencies around the world. We would be happy to work with ED in any way possible, “the Binance boss pointed out.
CZ’s clarification shocked many in the Indian crypto community as they were under the impression that Wazirx was a Binance company.
Clarification by Wazirx Founder, Binance’s Warning
In an effort to clarify the relationship between Wazirx and Binance, Wazirx founder Nischal Shetty He insisted on Twitter that his exchange was actually acquired by Binance.
He added that Zanmai Labs, an entity he owns, has licensed from Binance to operate INR-crypto trading pairs on Wazirx while Binance manages cryptocurrency pairs and processes cryptocurrency withdrawals.
Asking investors not to confuse Zanmai Labs and Wazirx, he revealed that Binance owns the Wazirx domain name, has root access to its AWS servers, has all crypto assets, and receives all crypto profits.
In response to Shetty’s tweets, CZ confirmed: “We could shut down Wazirx. But we can’t because it harms users. ”He added that Binance does not have operational control, including“ user registration, KYC, trading and initiation of withdrawals, ”noting that they are controlled by the founding team of Wazirx. The Binance CEO pointed out: “This was never transferred, despite our requests. The deal was never closed. No transfer of shares.”
CZ further tweeted:
If you have funds on Wazirx, you should transfer them to Binance. Simple as that. We could disable Wazirx wallets on a technology level, but we can’t / won’t. And no matter how many debates we’re enduring, we can’t / won’t hurt users.
What do you think of the situation in which the Indian cryptocurrency exchange Wazirx finds itself? Let us know in the comments section below.
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