Wazirx, one of the major Indian cryptocurrency exchanges, has had its banking assets frozen over $8 million by the Enforcement Administration (ED). Binance supposedly acquired the exchange in 2019. However, Binance CEO Changpeng Zhao (CZ) now claims that the acquisition is “never completed.” However, Wazirx confirms that it was acquired by Binance.
ED action against Wazirx
The Indian Enforcement Directorate (ED) issued a press release on Friday regarding Wazirx, a major crypto exchange in India. ED is the Indian government’s law enforcement and economic intelligence agency. Ad details:
The Directorate of Enforcement (ED) has conducted searches on one of the managers of M/s Zanmai Lab Pvt Ltd, which owns popular crypto exchange Wazirx and has issued an order to freeze its bank balances at INR 64.67 crore.
The ED stated that this action is part of its investigation into money laundering against non-bank financial firms (NBFC) and its fintech partners due to “predatory lending practices that violate the RBI”. [Reserve Bank of India] Guidelines.”
The announcement describes the following: “ED found that fintech companies diverted significant amounts of money to buy crypto assets and then launder them offshore. These companies and virtual assets are currently untraceable.”
The ED alleged that Zanmai Labs established a network of agreements with Crowdfire Inc. (USA), Binance (Cayman Island), Zettai Pte Ltd. (Singapore) “to hide ownership of Wazirx.” The regulator further alleged that Wazirx provided “contradictory” and “ambiguous” answers “to avoid the oversight of Indian regulators,” noting that the exchange failed to provide crypto transactions to suspected fintech firms.
The ED stressed that “due to the uncooperative attitude of the director of Wazirx Exchange, a search was conducted.” “It turns out that Mr. Sameer Mahatri, Director of Wazirx, has full remote access to the Wazirx database, but does not provide details of transactions related to crypto assets, which were purchased from the proceeds of the Instant Fraud crime via the loan application.” The law enforcement agency further claimed:
Lax KYC standards, loose regulatory control over transactions between Wazirx and Binance, no logging of transactions on the blockchain to save costs and no KYC registration of opposite wallets, all ensure that Wazirx cannot give any account to the missing. Crypto assets. No efforts have been made to trace these crypto assets.
“By promoting ambiguity and laxity in anti-money laundering standards, it has actively assisted around 16 accused fintech firms in laundering proceeds of crime using the crypto-path. Therefore, the transferred assets are equivalent to the extent of Rs. 64.67 crore. [$8.14 million] Lying with Wazirx is frozen,” the ED announcement concluded.
Binance Statements Regarding Acquisition of Wazirx
After seeing media reports of his exchange mentioning Wazirx, Binance CEO Changpeng Zhao (CZ) advertiser On Twitter that his company “does not own any shares in Zanmai Labs”.
On November 21, 2019, Binance published a blog post that “acquired” Wazirx. This transaction was not completed. Binance has never – at any time – owned any shares in Zanmai Labs, the entity that operates Wazirx.
“Binance offers wallet services to Wazirx only as a technical solution. There is also an integration using off-chain transmissions, to save on network fees. CZ explained that Wazirx is responsible for all other aspects of the Wazirx exchange, including user registration, KYC, trading, and initiating withdrawals.
“Recent allegations about the operation of Wazirx and how the platform is being operated by Zanmai Labs are of deep concern to Binance. Binance cooperates with law enforcement agencies around the world. We will be happy to work with ED in any way we can,” the Binance president confirmed.
CZ’s clarification shocked many in the Indian crypto community as they were under the impression that Wazirx is Binance.
Clarification from the founder of Wazirx, a warning from Binance
In an effort to clarify the relationship between Wazirx and Binance, Wazirx founder Nischal Shetty insist on On Twitter, Binance has already acquired his platform.
He added that Zanmai Labs, a jointly owned entity, is authorized by Binance to operate INR-crypto trading pairs on Wazirx while Binance operates crypto-to-crypto pairs and processes cryptocurrency withdrawals.
Asking investors not to confuse Zanmai Labs with Wazirx, he revealed that Binance owns the Wazirx domain name, has access to AWS servers, owns all crypto assets, and receives all crypto earnings.
In response to Shetty’s tweets, CZ confirmed: “We can close Wazirx. But we can’t because it hurts users.” He added that Binance has no operational control, including “user registration, KYC, trading and initiation of withdrawals,” noting that the Wazirx founding team controls it. Binance CEO confirmed: “This was never transferred, despite our requests. The deal was not closed. No stock transfers.”
More Czechoslovakia chirp:
If you have money on Wazirx, you must transfer it to Binance. So easy. We can disable Wazirx wallets on a technical level, but we can’t/we won’t. As much as we tolerate arguments, we cannot/will not harm users.
What do you think of the situation in Indian crypto exchange Wazirx? Let us know in the comments section below.
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