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Bollywood-like Drama Erupts as CZ Moves to Distance Binance from India’s WazirX Exchange

Tim Alper
Last updated: | 4 min read
Source: Adobe/Krakenimages.com

 

A bitter dispute about the ownership of WazirX, an Indian crypto exchange that is being probed by the nation’s law enforcers over suspected money laundering allegations, has descended into a Twitter-based face-off between the Binance CEO Changpeng “CZ” Zhao and the WazirX Founder Nischal Shetty.

Binance announced that it had “acquired” WazirX back in November 2019.

The issue appears to have begun on August 5, when India’s Directorate of Enforcement (ED) wrote in a press release that it had “conducted searches on one of the Directors of Zanmai Labs,” WazirX’s operator. It added that it had “issued a freezing order” to halt activities on the firm’s bank balances “to the tune of” some USD 8m.

The ED remarked of WazirX that the firm “works from a cloud-based software [platform] (@AWS Mumbai), all employees work from home, the registered office is a two-chair co-working WeWork space, and all crypto-crypto transactions are controlled by Binance, which is again without any known office, any known employee and rarely responds to [emailed] queries.”

Shetty, who is one of the owners of Zanmai, has been vocal in his response to the ED on Twitter, claiming that WazirX is a “decentralized” body.

WazirX stated:

“We have been fully cooperating with the ED for several days and have responded to all their queries fully and transparently. We do not agree with the allegations in the ED press release. We are evaluating our further plan of action.”

But another struggle is now playing out on Twitter with Zhao claiming that Binance never fully pulled the trigger on the deal – and Shetty stating that this is not true.

The original Binance blog post, published on November 21, 2019, featured a quote from Zhao, who said at the time:

“The acquisition of WazirX shows our commitment and dedication to the Indian people and strengthen[s] the blockchain ecosystem in India as well as another step forward in achieving the freedom of money.”

But the post was updated on August 5 this year, with a paragraph that read:

“We would like to clarify that the 2019 ‘acquisition’ described in this blog was limited to an agreement to purchase certain assets and intellectual property of WazirX. Binance did not purchase any equity (and does not own any equity) in Zanmai Labs, the entity operating WazirX and established by the original founders. In addition, WazirX (including the foregoing assets) continues to be operated and managed by Zanmai Labs.”

Shetty has claimed that Zhao is twisting the truth, however. And the Binance chief responded by accusing Shetty of engaging in “deception”-based word games.”

Zhao further accused WazirX of being “uncooperative with” Binance, and claimed that it “looks like” the firm was being “uncooperative with [the] ED as well.”

Shetty, though, refuted all of Zhao’s claims, stating that WazirX had been fobbed off with “ambiguous answers” when it made inquiries about a Binance “parent entity.”

Shetty added that as recently as “February,” the “Binance team wanted” to take “control of Zanmai.”

Previously, Zhao had urged users with funds on WazirX to transfer their holdings to Binance. 

He wrote:

“We could disable WazirX wallets on a tech level, but we can’t/won’t do that. And as much debates as we are enduring, we can’t/won’t hurt users.”

The plot has continued to thicken, however. Apoorva Mittal, a reporter with the Economic Times, one of India’s leading English-language media outlets, wrote that “CZ” had “told” her that the “transaction” between Binance and the WazirX operator was “never completed.”

Zhao, however, denied such a conversation had ever taken place.

But one of the Economic Times’ reporter’s colleagues leaped to Mittal’s defense, writing that she would be “happy to send across” Zhao’s “mail” with “your quotes to refresh your memory.”

Mittal further countered that WazirX “users are clueless with no official statement on how it impacts them.”

She added that Binance, on August 7, “disabled off-chain transactions with WazirX.”

And the reporter claimed that Zanmai was “exploring the legal route” in the struggle with Binance, quoting “sources” close to the Indian firm.
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