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WazirX is an intermediary whose platform was misused: Zanmai Labs on ED’s order

Zanmai Labs' statement comes days after ED's announcement and disagreements with Binance

August 10, 2022 / 09:14 AM IST
Representative image

Representative image

Amidst ongoing clash with Binance and Enforcement Directorate (ED) freezing its bank assets, WazirX’s parent Zanmai Labs on August 9 issued a statement saying that all its users are KYC compliant and WazirX acts like an intermediary who's platform was misused.

“Users are signed up on WazirX only after they complete the KYC process, including submitting proof of address and identity. Our KYC/AML terms and processes are available on the platform publicly. For every transaction, we are able to produce the KYC details of the relevant user. We do not accept any cash transactions. We have fully cooperated with the Enforcement Directorate (ED) for several days and have responded to all their queries fully and transparently,” the startup said in the statement.

“ED appears to be investigating the transactions of certain users and Zanmai Labs has no affiliation to such users and is unaware about the purpose of their transactions. Zanmai Labs is in the position of any other intermediary whose platform may have been misused,” it added.

ED on August 5 had frozen WazirX’s bank assets worth Rs. 64.67 crores and searched premises of one of the directors of parent company Zanmai Labs. The WazirX’s director was accused of assisting instant loan app companies in money laundering via purchase and transfer of virtual crypto assets.

Earlier the Finance Ministry had accused WaxirX of violating Foreign Exchange Management Act (FEMA) by allowing outward remittance of crypto assets worth Rs 2,790 crore to unknown wallets


Misunderstanding of off-chain transactions

Following the ED statement, Binance had decided to remove off-chain fund transfers with WazirX, which mean users won’t be able to make transactions outside blockchain network that helped in saving on gas fee costs.

There has been misconception surrounding off-chain transactions being used make those fraudulent payments avoiding recording of those transactions, Zanmai Labs said.

 Secondly, there seems to be a major misunderstanding about off-chain transactions between WazirX and Binance. Off-chain transactions between WazirX and Binance can only be done by a user between his/her/its own account on the two platforms. Hence, KYC details are available for all off-chain transfers as well [and have been submitted to the ED when requested]. Off-chain withdrawals also cannot happen if the accounts are not KYCed. Law Enforcement Agencies (LEAs) can get complete information about the accounts involved in off-chain transfers,” the company said.
Debangana Ghosh
ISO 27001 - BSI Assurance Mark