Binance to stop wallet services to Zanmai Labs-owned WazirX

(Source: Reuters)

Crypto exchange Binance on February 3 announced it was ceasing wallet services to Zanmai Labs-owned Indian crypto exchange WazirX. This is coming months after a public spat started between founders of Binance’s CEO Changpeng Zhao (CZ) and WazirX’s Nischal Shetty disputing ownership of WazirX’s assets and operations.

In the latest blog published by Binance, the company said, “It is in the interests of Binance and the public that Zanmai is not permitted to perpetuate false narratives on the basis of their use of Binance’s wallet services. We view such false claims as an attempt to shift the responsibility over WazirX’s operations to Binance.”

According to the post, Zanmai was offered a choice on January 26 to either retract its public statements and continue using Binance’s services or terminate the use of the latter’s wallet service.

“Since Zanmai has refused to clarify their misleading statements, Zanmai has till 3 February 2023 (23:59 UTC) to remove the funds from the accounts that they used for WazirX’s operations,” Binance said.

We sent queries to WazirX and the response was yet to come till the time of writing this article. Any comments from the firm will be added to the copy.

As the deadline nears, Binance said it wanted to inform the users whose assets are deposited with WazirX, adding that it “does not have control over Zanmai’s management of WazirX user funds.”

The post claimed that Zanmai have informed the crypto exchange of their intention to withdraw the assets from the relevant accounts.

Binance also said it has invited Zanmai to help arrange the withdrawal of remaining assets post-February 3.

“On our end, we are doing everything we can to facilitate this process. As an exception, we have invited Zanmai to work out arrangements with us to withdraw any remaining assets in the relevant accounts after 3 February. However, the responsibility ultimately lies with the Zanmai team to make the withdrawals expeditiously, it said.

The backstory

This spat started on August 5, 2022, when the Enforcement Directorate (ED) had frozen bank assets of WazirX worth Rs 64.67 crore in relation to allegedly assisting a bunch of accused loan apps in money laundering and fraud through the transfer of virtual crypto assets. The central agency took action against the WazirX director. Following this, Binance’s CZ took to Twitter to clarify that his firm didn’t own any equity in WazirX and nor did it control its operations.

This came as a shock to investors while the rift between founders continued to escalate over Twitter. As of 2019, it was known that WazirX was acquired by Binance through a Binance blog post dated November 21, 2019.