Binance sides with Indian regulators in WazirX fallout to cease support for off-chain transfers
Binance denied any equity ownership in the India-based crypto exchange after the latter came under regulatory scrutiny.
Binance is scheduled to remove off-chain fund transfers with Indian cryptocurrency exchange WazirX on Thursday, users will still be able to deposit and withdraw balances via the standard withdrawal and deposit process between the exchange
The Directorate of Enforcement of India (ED) alleged that WazirX actively assisted approx 16 accused fintech companies in laundering the proceeds of crime using the crypto route and subsequently froze $8.1 million in bank balance related to the exchange.
There is ongoing controversy regarding whether Binance owns the exchange. Changpeng Zhao CEO of Binance crypto exchange said that Binance does not own any equity in WazirX parent entity Zanmai Labs, and further clarified that a supposed Nov 21, 2019 acquisition of WazirX by Binance was never completed.
In a tweet on April 5, 2021, Zhao reposted the following statement.
"Binance-owned Indian crypto exchange WazirX crosses $200 million in daily trading volume; eyes $1 billion in 2021."
Nischal Shetty founder of WazirX claimed that WazirX was acquired by Binance, with the latter involved in an operation like crypto-to-crypto trading pairs. processing crypto withdrawals. Nishal Shetty alleged that Binance owned the WazirX domain name, had root access to its server, and controlled all of WazirX's crypto assets and trading profits.
CZ adamantly denied such claims stating:
"Binance only provides wallet services for WazirX as a tech solution. There is also integration using off-chain tx to save on network fees. WazirX is responsible for all other aspects of the WazirX exchange, including user sign-up, KYC, trading, and initiating withdrawals.
Furthermore, WazirX has been embroiled in several controversies as of late last year, India's enforcement was already investigating the exchange due to allegations of Anti Money Laundering fallings, and government officials from the Central GST and Central Excise committee recovered $6.62 million of funds from the exchange after detecting GST evasion on trade commissions.