Binance Rejects Ownership, Statement of Cryptocurrency Exchange Issues; What we know

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Binance, the world’s largest cryptocurrency exchange by trading volume, said it does not own a stake in WazirX, hours after the enforcement department froze the assets of Samir Mahathri, director of Zanmai Lab Pvt Ltd, the company that runs WazirX. The Enforcement Department (ED) on Friday said it has frozen Rs 64.67 crore bank deposits worth Rs 64.67 crore to one of India’s prominent cryptocurrency exchange WazirX as part of an ongoing money laundering investigation against certain smartphone-based loan fraud apps “backed” with Chinese funds.

Here is what we know so far about the WazirX raid and subsequent row on Binance.

ED Blitz Minister X

On Friday, the emergency department said it carried out raids against Sameer Mahatri, director of Zanmai Lab Pvt Ltd (which owns WazirX) on August 3 because it was unwilling to obtain information from him and was “uncooperative”. She said the exchange and its executives were “providing contradictory and ambiguous answers to avoid oversight by Indian regulators”.

“Their managing director Nischal Shetty claims that WazirX is an Indian exchange that controls all crypto and INR-crypto transactions and only has an IP and a preferential agreement with Binance.” “But now, Zanmai claims that they are only involved in INR-crypto transactions, and all other transactions are conducted by Binance on WazirX,” the ED said.

“We have been fully engaged with the Enforcement Department (ED) for several days and have answered all of their inquiries completely and transparently. We do not agree with the allegations in the ED press release. We are evaluating our additional work plan,” a WazirX spokesperson told News18 on Saturday.

Binance founder denies involvement with WazirX

Shortly after this news, Binance founder Changpeng Zhao said that he has no ties to WazirX and does not own any stake in Zanmai Labs. “Binance does not own any shares in Zanmai Labs, the entity that runs WazirX and which was set up by the original founders,” he said.

“On November 21, 2019, Binance published a blog post that it has “acquired” WazirX. This transaction has not completed. Binance has never – at any time – owned any shares in Zanmai Labs, the entity that operates WazirX.”

He said that WazirX is responsible for all other aspects of the WazirX exchange, including user registration, KYC, trading and initiating withdrawals, and Binance only provides wallet services to WazirX as a technology solution. “Recent allegations about the operation of WazirX and how the platform is operated by Zanmai Labs are of deep concern to Binance. Binance cooperates with law enforcement agencies around the world. We will be happy to work with ED in any way we can,” Zhao said.

Founder of WazirX Counters Binance Claim

WazirX founder Nischal Shetty on Friday responded to Zhao’s claim and said the platform was acquired by Binance. “Zanmai Labs has a license from Binance to operate INR-Crypto pairs on WazirX,” he said. Shetty said WazirX is “still owned by Binance.”

WazirX, last year, got Rs 2,790 crore worth of Reason Show Notice from the ED due to an alleged breach of the Foreign Exchange Management Act (FEMA).

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