What are the allegations? What cryptocurrency users should know



After the raids of the Execution Directorate WazirX Last week, the manager of the world’s largest cryptocurrency exchange by volume, Binance, which had announced its purchase of WazirX in November 2019, has now backtracked on the agreement between the two companies. This prompted users to find out who controls WazirX. Now, Binance has also removed off-chain crypto transfers to the crypto exchange WazirX, a feature popular among its users.

Off-chain transactions on the crypto network transfer value off the blockchain. These are low cost transactions and have been popular among investors on WazirX.

“Binance believes in maintaining an open dialogue with regulators, policy makers and the law enforcement community as we collectively strive to create a global regulatory framework for the industry,” Binance said in a statement.

What are the allegations?

A war of words is raging between WazirX founder Nischal Shetty and Binance CEO Changpeng Zhao. In November 2019, Binance announced through a blog that it had “acquired” WazirX. Zhao also spoke about Binance’s commitment to developing and building the country’s cryptocurrency ecosystem India A global blockchain innovation center.

Binance also said that the acquisition of WazirX represents a company’s strategy to increase its growing list of global partners in an effort to provide the global crypto community with easy access to cryptocurrencies in a fast and secure manner.

In another tweet on August 5, he said, “Binance does not own any shares in Zanmai Labs, the entity that operates WazirX and was created by the original founders.”

WazirX founder Nischal Shetty said in his tweet, “Binance has acquired WazirX. Zanmai Labs is an Indian entity owned by me and my co-founders. Zanmai Labs has a frm Binance license to operate INR-Crypto pairs at WazirX. Binance operates cryptocurrency for crypto-pairs, and handles currency withdrawals. encrypted”.

Shetty also said that Binance owns the WazirX domain name. Binance has root access to AWS servers. Binance has all Crypto assets. The Binance platform owns all the cryptocurrency earnings. Do not confuse Zanmai with WazirX. “You can verify this fact by going to the TOS of WazirX.”

In response, Zhao said in a tweet on August 6: “Binance provides wallet services to WazirX. The WazirX domain is transferred to our control. We’ve gained joint access to an AWS account. We can close WazirX. But we can’t, because it hurts users.”

He added that Binance has no control over the operations including, “user registration, KYC, trading and initiation of withdrawals,” as mentioned earlier. “The founding team of WazirX is in control of this. This was never transferred, despite our requests. The deal was not closed. No stake xfers.”

Zhao said, “We requested a transfer of the source code for WazirX’s system, deployment, and operations, as recently as February of this year. This was rejected by WazirX. Binance does not control their systems. WazirX has not been cooperating with us, and appears to be uncooperative with ED as well. “.

ED raids on WazirX?

On August 5, ED conducted searches on the manager of Zanmai Lab, which owns crypto exchange WazirX, and frozen bank assets worth Rs 64.67 crore. The CEO is conducting a money laundering investigation against several Indian NBFC companies and their fintech partners due to their predatory lending practices.

The agency launched raids against the director of Zanmai Lab on August 3 in Hyderabad, claiming he was “uncooperative”. Its investigation against the cryptocurrency exchange is linked to its ongoing investigation against a number of Chinese loan applications (mobile applications) operating in India. The agency had indicted WazirX last year for violating the Foreign Exchange Management Act (FEMA).

“It turns out that Sameer Mahatri, Director of WazirX, has full remote access to the WazirX database, but although he does not provide details of transactions related to crypto assets, which were purchased from the proceeds of the crime of fraud in the instant loan application… KYC criteria “Lax, loose regulatory control over transactions between WazirX and Binance, no logging of transactions on blockchain to save costs and no KYC registration of corresponding wallets have ensured that WazirX is unable to give any account of the lost crypto assets,” the ED claimed in a statement. .

WazirX was launched in 2017 and is one of the largest cryptocurrency exchanges in India.

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