WazirX, Binance engage in war of tweets; investors worry about future

ED’s actions on crypto exchange WazirX had spread ripples in the industry with actions spreading to sevral other entities in the industry ecosystem while investors staying away from the industry. WazirX investors have been raising their concerns about cryptos and funds with the Indian exchange. More importantly, a war of words among WazirX and its Chinese counterpart Binance has escalated on tweeter platform.

Investors have been worried about their investments and credits with WazirX, a few tweets by investors buying cryptos on thie platforms said that tp retail investors both WazirX and Binance have been giving the impression that Binance owns WazirX. 

Since April volumes were drying out but now without formally banning crypto, ED's action has resulted in industry activities coming to a standstill.

On Friday, the Enforcement Directorate had searched the Hyderabad premises of a director of Zanmai Lab, the company that runs popular crypto currency exchange WazirX, and froze its bank account, which has a balance of Rs. 64.67 crore. This has investors’ money as well. While investors are likely to get their money when released subject to they have clear records. The move has made investors worried who have credits with the exchange.

The ED has found major amount was diverted to WazirX and the crypto assets so purchased have been sent to unknown foreign wallets,” an Enforcement Directorate had said earlier. ED’s action has stirred up a hornets’ nest of relationship between WazirX and Binance a leading Chinese exchange. Both exchanges are now up in arms on the relationship on tweeter's platform.

Originally WazirX and Binance entered a deal which included sale of WazirX Technology (IP) to BInance which was then licensed by Binance to Zanmai (the company that owns WazirX) for the Indian Rupee market. According to WazirX, Binance was handling crypto to crypto transfers and also providing wallet services to those investors who wanted to withdraw their cryptos from WazirX, ( an exchange's pool account) and ready to keep with the wallet service that Binance was providing.

In short, post licensing, Binance was operating crypto to crypto trading, crypto deposit/withdrawals and Zanmai operated INR-Crypto trading, INR deposit/withdrawal. However because of the ED’s action, the ongoing issue of clarity of ownership of BInance came to light. WazirX said it has been raising this with Binance.

Changpeng Zaho, CEO of Binance yesterday tweeted that “we asked for transferring of WazirX system source code, deployment, operations, as recently as  Feb this year. This was refused by WazirX. Binance do NOT have control on their systems. WazirX has been uncooperative with us, and looks like uncooperative with ED as well.”

In reply to this tweet, Nischal Shetty, founder of WazirX said in a series of tweets that, “Deal between the two involved Binance Parent entity and we asked about it. We were given an ambiguous answer that the parent entity is under restructuring.  It’s been many months, still waiting for Binance Parent entityCan Binance name Parent entity?”

An industry official has stated that who owns BInance has been a debate since long time because there are several companies in that group and which one is the holding company is unclear.

Nischal further said that, “In Feb, Binance team wanted control of Zanmai but that they can acquire shares.” Denying the non cooperation to ED the tweet further said that, “Zanmai labs has been co-operating with ED from over 7 days and has submitted all the required data and we will continue to cooperate.”