WazirX users left in the lurch as Binance unplugs off-chain transfers to the crypto exchange

CZ's next tweet, however, triggered panic among users as he said that users should transfer their funds from WazirX to Binance.

Users have also flooded the WazirX Telegram channel asking how to carry out transfers from WazirX to Binance, what happens to their funds and why these questions are being raised after so many years and if WazirX will shut down.

The common question among the users has been about the WRX coin which is listed on WazirX and whether Binance will delist the coin. According to CoinMarketCap, WRX price dropped from $0.27 to $0.24 at the time of publishing.

CZ also tweeted, “We asked for transferring of WazirX system source code, deployment, operations, as recently as February this year. This was refused by WazirX. Binance does NOT have control on their systems. WazirX has been uncooperative with us, and looks like uncooperative with ED (Enforcement Directorate) as well.”

However, WazirX has been assuring its users saying, "In the light of recent news about WazirX, we wanted to assure you that operations are being conducted as usual. Crypto and rupee withdrawals are being processed normally.”

It added, “Notwithstanding the action taken by the ED, we would like to state that currently deposits and withdrawals are working as usual. We are evaluating our further plan of action and will always act in the best interest of users.”

Rajagopal Menon, vice president of WazirX, told Moneycontrol, “We are the only large crypto exchange that allows complete withdrawals of cryptos in India and that shows how solvent we are and how sensible our business model is. Rupee withdrawals are working, and there is no issue in terms of the structural viability of the company. Users crypto is safe."

The tweets from CZ came hours after the ED issued a statement saying it has frozen WazirX’s bank assets worth Rs 64.67 crore. The agency took action against a WazirX director alleging that the company is assisting Chinese instant loan app companies in the laundering of fraud money through the purchase and transfer of virtual crypto assets.

The finance ministry also told the Rajya Sabha that the ED is investigating two cases against WazirX under the Foreign Exchange Management Act, 1999 (FEMA), adding that its parent company Zanmai Labs was using the walled infrastructure of Binance.

This comes at a time when in the first six months of 2022, top crypto exchanges such as WazirX, CoinDCX, Bitbns and Zebpay, among others, lost more than 70-75 percent of their trading volumes on a monthly average basis. Following the July 1 implementation of the 1 percent TDS (tax deducted at source) on virtual digital assets that was announced in the budget, the situation has only worsened.