As the clash between WazirX and Binance escalates, a senior executive from the latter revealed that WazirX has been avoiding to pass on full ownership of its assets to Binance for the past two years. The global cryptocurrency trading platform will not engage with WazirX in the future, especially with the ongoing Enforcement Directorate (ED) investigation.
Moreover, Binance claimed that ED has not been in touch with its teams during the investigation.
ALSO READ: Binance to cease off-chain fund transfers with WazirX
The public disagreement through a barrage of tweets between Binance CEO Changpeng Zhao (known as CZ) and WazirX CEO Nischal Shetty started a few hours after ED issued a statement that it will freeze WazirX's bank assets worth over Rs 64 crore, after it was allegedly being involved in assisting illegal Chinese lending apps make cross-border payments using crypto tokens through its network, violating Foreign Exchange Management Act (FEMA).
Binance will also request Indian users to move their assets officially to Binance.com, in an announcement expected shortly. WazirX currently accounts for nearly 50 percent of the Indian crypto trading volumes.
“In 2019, when we entered the market, we thought WazirX would be a good partner to enter the market in authentic way. As soon as we sat down to discuss business, problems started to appear. Over the past two years, we have been having hot debate with WazirX to pass ownership to us. That debate continues to this day,” Patrick Hillmann, Chief Communications Officer, Binance said in an interview with CNBC TV-18.
He added, “With regards to timing of this, we got to know about the ED investigation when it appeared in the news. ED has not been in touch with our teams yet, but our global investigations team looks forward to support the ED investigation if they reach out to us.”
According to Hillmann, Binance was looking for a full acquisition but at the time of passing over the assets, WazirX has been dragging its feet.
“CEO Nischal Shetty told us ‘we have given you access to our AWS pass keys’, but that’s not what we meant by ownership. The operations, marketing, how users are KYC-ed, actual database of the users were all kept, owned and run by WazirX.”
“It’s like they sold us a car, handed us the title and then kept the keys with them. They have been driving the car for the last 2 years. Now the ED has asked them information on what they used the car for and now they are throwing up their hands saying Binance owns the title. Zanmai Labs continue to own and operate WazirX despite us trying to claw back ownership. Nischal’s own website mentions him as the CEO, even after he moved to Dubai. He thinks ED will be dim about this but they are not, sooner or later they will be held accountable,” he added.
Interestingly, WazirX co-founders Nischal Shetty and Siddharth Menon were transitioning out of their active roles in the company, by moving to Dubai in February 2022. This was said to be a move done to let Binance take over operations, as the company was also looking to set up management team to oversee WazirX.
Indian users can move to Binance
“We are just managing wallets for them right now. We have zero transparency on their day-to-day operations and obligations. This has been significant concern for us and we have been trying to work through various legal avenues for that, but so far it has been of no avail. We are now pursuing additional options,” Hillmann said.
Right now, Binance said its focus is on Indian users not getting impacted. Binance will shortly make an announcement, asking Indian users to move their assets officially to Binance.com so that “they continue to provide frictionless services to them, as the WazirX saga continues to play out with ED.”
What’s next?
Binance will make headways into India, which it sees as a long-term opportunity and a talent recruiting hub. Hillman added that the company won’t be engaging with Zanmai Labs going forward.
“It has to come to a conclusion, this has been going for two years for now. Now with this ED investigation, this has crossed threshold. India is a very important marketplace. It is going to be a game changing factor for the India economy as well as the world. We get a lot our talent from here including our CTO, co-head of engineering. India is a priority market for us, and we will find the way one way or other,” he said.
“India market is a tremendous opportunity for Indian users wanting to access crypto and for us to recruit from engineering and talent standpoint. There are questions around how crypto will be taxed and regulated, but we are really excited to continue working with the Indian government to find good solutions to those tough questions in hand,” Hillmann added.
At some point, Binance will be making headways into the Indian market, but that will take some time, Hillmann said.
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