Binance, the world’s largest cryptocurrency exchange by trading volume, announced on August 5 that it no longer controls the India-based platform WazirX, despite having announced the acquisition two and a half years ago. This move has perplexed industry participants, including the Indian company that claims the purchase took place. The country’s economic criminal investigation section has frozen the assets of Binance’s Indian subsidiary WazirX, further tarnishing the cryptocurrency exchange’s image.

The Prevention of Money Laundering Act requires India’s Enforcement Directorate (ED) to freeze US$8.15 million in bank accounts belonging to Zanmai Lab Pvt Ltd, the company behind WazirX. The freeze was imposed due to an ED investigation into predatory lending organizations allegedly using regional cryptocurrency exchanges to conceal their illegal funds.

Binance Quoted on August 5th: 

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.

WazirX Acquisition

Binance announced its acquisition of WazirX in a blog post published at the end of 2019. The official blog post included a photo of Zhao, the WazirX founders, and the Binance executive’s excitement for the transaction. According to the 2019 post, Binance founder and CEO Changpeng Zhao said, “The acquisition of WazirX demonstrates our commitment and devotion to the Indian people, strengthens the blockchain ecosystem in India, and is another step toward achieving financial freedom.”

WazirX stated in a different blog post from April 2021 that the company had been “successfully bought by Binance.” Changpeng Zhao, on the other hand, stated in a series of tweets that the company has been attempting to close the sale for several years. However, the transaction has yet to be completed due to a few complications, which he has chosen not to comment.

Online Dispute between WazirX and Binance

Nischal Shetty, a co-founder of WazirX, is disputing Zhao’s claims in an online tit-for-tat battle between the exchanges’ founders. Shetty tweeted that the cryptocurrency exchange had purchased WazirX less than two hours after Zhao formally distanced Binance from the Exchange. WazirX has come under fire from the Directorate of Enforcement (ED), the country’s financial authority, over claims that the exchange’s operator, Zanmai Labs, enabled money laundering on the Exchange.

The exchange claims to be the “largest” cryptocurrency exchange in the country, with approximately 31.7 million members, which is approximately eight million fewer than CoinDCX, another significant Indian exchange with 40 million users in March. Binance, the fourth-largest exchange in the country, has over 27.6 million users, according to Business Insider India.

ED Investigation

Last year, the Enforcement Directorate (ED) investigated WazirX for alleged violations of foreign currency regulations. In 2021, the ED looked into a money laundering case involving Chinese-owned, illegal internet gambling software. During the investigation, the ED discovered that the laundered profits of crime, totaling approximately 570 million rupees, had been converted into cryptocurrency via the Binance platform. However, Zhao clarified that Binance only provides wallet services for WazirX as a technical solution.

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