The Indian Crypto Exchange WazirX is under investigation by the Enforcement Directorate (ED). The exchange company is allegedly charged with several illegal activities. Initially, it was claimed that WazirX is owned by the global crypto exchange platform Binance. But after the charges, Binance rejected the ownership ‘rumors’ and clearly stated that they don’t have any stake or ownership in WazirX! This shocking announcement became one of the greatest concerns in the crypto market. Also, the defender WazirX stated numerous unknown matters regarding the ownership.
Binance vs WazirX :
After rejecting the ownership idea by Binance, the parent company Zanmai Labs is taking the headlines. It is claimed that the real owner company of WazirX is Zanmai Labs, not Binance. Recently, a money laundering investigation is taking place by ED on this crypto exchange company. The ‘rumored’ owner Binance’s founder and chief executive Changpeng Zhao stated clearly that Binance does not have any ownership or shares in Zanmai Labs, the entity operating WazirX, or any other organization under the company.
It seemed that Binance acquired WazirX. But Zhao said that the company published an ‘acquired’ blog post in November 2019. But the process and transaction never happened.
On the other side the founder and executive of WazirX, Nischal Shetty stated, that Binance indeed took ownership of WazirX two years ago. He said Zanmai Labs is a different entity. It has the license to operate INR or crypto pair on WazirX. While other activity like cryptocurrency transaction and withdrawal is operated by Binance itself through the ownership of WazirX. Ultimately, the exchange company WazirX is still acquired by Binance said, Mr. Shetty.
After the statement of Shetty, Zhao shared that Binance does not hold the owners of WazirX, but it provides only wallet services as a technical solution. That means Binance is a service provider of WazirX, not the owner, according to its executive.
Zhao also stated that the other responsibilities such as user sign-up, log-in, KYC (Know Your Customer), etc. are under the control of WazirX. According to him, apart from providing wallet service, no connection is there between Binance and WazirX.
Zhao further said that his company and its team will help ED if needed. The founder is free to connect with the investigation. Even he proposed ED reach them out for any query.
What Is Happening?
In the last couple of days, WazirX and Binance controversy has been dominating the crypto headlines. ED stopped the WazirX activity after getting the suspect. The enforcement directorate searched on WazirX internal teams. One of the directors of Zanmai Labs was suspected and ED has ceased its bank account. The account had 64.67 crore rupees. ED ordered to freeze the account.
It is charged against WazirX that the exchange company helped 16 fintech companies who are charged with money laundering and illegal activity. Not only indirect money laundering but also, but WazirX was also accused of its complicated unclear ownership structure. Additionally, the company is charged with violating KYC norms and even failing to conduct any enhanced due diligence (EDD).
Other Allegations :
Later it was revealed that WazirX had also issued the transaction record. Most of the transactions were not recorded in its blockchain. Even which bank account is connected or which funds are coming to purchase the assets, are unknown. No records were there. Also, No physical address verification or source checking of funds of the clients are not listed or recorded to the platform.
On the other hand, Binance is a prominent global crypto exchange company. But the controversy between these two renowned companies has sensationalized the crypto market. Both platform users are in a panic.