Binance-owned WazirX, India's leading cryptocurrency exchange, is preparing for a transition. Two of its co-founders, Nischal Shetty and Siddharth Menon, have stepped away from day-to-day operations and are now focusing on their new projects, people familiar with the development said.
Moneycontrol has learned that both the co-founders have taken a step back from active operations and will be associated only in advisory roles. While Menon will continue in a passive capacity, Shetty has moved out of the day-to-day operations. The third co-founder and CTO Sameer Mhatre will continue in his current role as of now.
These changes at WazirX come at a time when competitive intensity is going up, with rivals such as CoinDCX and Coinswitch turning unicorns, even as the regulatory environment continues to be uncertain. The government and the central bank are sending mixed signals on the future of private cryptocurrencies in India.
One of the persons cited above said global cryptocurrency exchange Binance, which acquired WazirX in 2019, may look at setting up a management team to oversee its operations as the competition landscape among the crypto exchanges in India has intensified in the last year with crypto adoption growing significantly. WazirX' rivals in India include Coinswitch, CoinDCX, Unocoin, Zebpay, and Bitbns, among others.
Apart from regulatory uncertainty, with the newly imposed 30 percent tax on private virtual assets announced in the recent Budget, trading volumes are expected to take a hit, putting further pressure on the business. A few days ago, RBI Deputy Governor T Rabi Sankar said banning cryptocurrency is "perhaps the most advisable choice open to India." Prior to that, RBI Governor Shaktikanta Das also said that cryptocurrency is a threat to India’s macroeconomic stability and investors betting on it are doing it at their own risk.
Earlier this month, Shetty said he is working with blockchain architect Omar Syed, and the duo are launching a Layer-1 blockchain network “Shardeum” which is an EVM (Ethereum Virtual Machine)-compatible sharded blockchain. This project will be competing with other Layer-1 Blockchains such as Ethereum and Solana. According to industry experts, building Layer 1 is one the toughest areas as it requires building a whole ecosystem on top of it and the other Blockchains are already quite ahead.
On February 15, Menon said he is launching Web3 game ecosystem marketplace Tegro, along with game development firm SuperGaming. This announcement comes on the heels of SuperGaming roping in Menon as an adviser for its Web3 initiatives. However, Tegro will operate as a separate entity.
Responding to an e-mailed query, a WazirX spokesperson said, “Nischal Shetty launched a breakthrough open-sourced blockchain project, Shardeum. This decentralised project is Nischal's further foray into the blockchain sector, over and above his role of being at the helm of WazirX.”
When contacted by Moneycontrol, Shetty said, “Shardeum is an open-source project and I am dividing my time between both the projects currently.”
Menon will now be entirely working on his new gaming startup. “Siddharth sees this as a natural extension of his role in contributing to and furthering the crypto landscape. He will continue to be associated with WazirX in a passive capacity for now,” said the WazirX spokesperson.
WazirX, which has grown to be one of the largest cryptocurrency exchanges in India with over 10 million users, was founded in 2017 and acquired by Binance in 2019.
“The lock-in period for the founders was two years. Since it was a 100 percent acquisition, the founders didn’t have any value left. This move was quite expected,” said one person familiar with the matter.
He added, “In hindsight, it may look like a bad decision as the deal size was quite low but back then the regulations were not favourable and there was a ban being discussed, hence being acquired was the only way out.”
While they did not disclose the size of the acquisition, it was estimated at $5-$10 million, a pittance if you compare it with the over $1 billion valuation that CoinDCX and Coinswitch clocked, barely two years later.
Further, sources add that since Shetty has been the face of the company, it is only a matter of time till he announces his exit.
“Running an exchange needs 100 percent involvement as you are talking to regulators and other stakeholders. At this point, announcing an exit can become tough and so the delay is a logical step,” added the person cited above.
Another industry source added, “Since both founders have announced their own initiatives, Binance-owned WazirX may be looking to put in place a new management team. Both Shetty and Menon may want to stay on in advisory roles," said an industry source.
Prior to WazirX, Shetty and Menon had co-founded Crowdfire, a platform for content creators. Menon has been a serial entrepreneur and apart from CrowdFire, he also co-founded ventures like JustMigrate, a platform for bloggers among other ventures.
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