Major Indian cryptocurrency exchange Wazirx has frozen over $8 million of its banking assets by the Enforcement Administration (ED). The exchange was allegedly acquired by Binance in 2019. However, Binance CEO Changpeng Zhao (CZ) now claims that the acquisition “was never completed.” However, Wazirx claims that it was acquired by Binance.
ED actions against Wazirx
Enforcement Authority of India (ED) published Friday’s press release regarding Wazirx, a major crypto exchange in India. ED is the law enforcement and economic intelligence agency of the Government of India. Details in the ad:
The Enforcement Directorate (ED) raided one of the directors of M/s Zanmai Lab Pvt Ltd, which owns the popular Wazirx cryptocurrency exchange, and issued an INR 64.67 crore bank account freeze order.
ED said the action is part of its money laundering investigation of non-bank financial companies (NBFCs) and their fintech partners for “predatory lending practices in violation of the RBI.” [Reserve Bank of India] guidelines.”
The announcement reads: “ED found that large sums of funds were diverted by fintech companies to buy crypto assets and then launder them abroad. These companies and virtual assets are currently untraceable.”
ED claimed that Zanmai Labs had created a network of agreements with Crowdfire Inc. (USA), Binance (Cayman Islands) and Zettai Pte Ltd. (Singapore), “to hide the ownership of Wazirx”. Authorities also said that Wazirx was giving “controversial” and “ambiguous” responses “to avoid oversight from Indian regulators,” noting that the exchange had failed to secure suspected fintech companies’ cryptocurrency transactions.
“Due to the intractable position of the director of the Wazirx exchange, operational-search activities were carried out,” ED emphasized. “Mr. Sameer Mhatre, director of Wazirx, has been found to have full remote access to the Wazirx database, but despite this, he does not provide details of transactions relating to crypto assets acquired with the proceeds of crime of Instant. Loan Application Fraud. Law enforcement also claimed:
Weak KYC regulations, weak regulatory control over transactions between Wazirx and Binance, no record of transactions on blockchains to save money, and no record of KYC of opposing wallets have resulted in Wazirx being unable to provide any missing report. crypto assets. He made no effort to track these crypto assets.
“By encouraging obscurity and enforcing lax AML regulations, he actively assisted some 16 accused fintech companies in laundering the proceeds of crime using the crypto route. Thus, equivalent movable assets of Rs. 64.67 crores [$8.14 million] lying with Wazirx were frozen,” the ED said in a statement.
Binance’s Wazirx Acquisition Statements
Seeing media reports of his exchange being mentioned in connection with Wazirx, Binance CEO Changpeng Zhao (CZ) declared on Twitter that his company “does not own shares in Zanmai Labs.”
On November 21, 2019, Binance published a blog post that it had “acquired” Wazirx. This transaction was never completed. Binance has never – at any point in time – owned shares in Zanmai Labs, the organization that runs Wazirx.
“Binance provides Wazirx wallet services as a technical solution only. There is also integration using off-chain tx to save on network fees. Wazirx is responsible for all other aspects of the Wazirx exchange, including user registration, KYC, trading, and initiating withdrawals,” CZ explained.
“Recent accusations about the operation of Wazirx and how Zanmai Labs operates the platform are of great concern to Binance. Binance cooperates with law enforcement agencies around the world. We will be happy to cooperate with ED in any way we can,” the Binance boss emphasized.
CZ’s clarification shocked many in the Indian crypto community as they were under the impression that Wazirx was a Binance company.
Wazirx Founder Clarification, Binance Warning
In an attempt to clarify the relationship between Wazirx and Binance, Wazirx founder Nishal Shetty insisted on Twitter that his exchange was indeed acquired by Binance.
He added that Zanmai Labs, a company he co-owns, has received a license from Binance to manage INR-cryptocurrency trading pairs on Wazirx, while Binance manages crypto-crypto pairs and processes crypto withdrawals.
Asking investors not to confuse Zanmai Labs with Wazirx, he revealed that Binance owns the Wazirx domain name, has root access to its AWS servers, owns all crypto assets, and receives all crypto profits.
Replying to Shetty’s tweets, CZ confirmed: “We could shut down Wazirx. But we can’t because it harms users.” He added that Binance has no operational control, including “user registration, KYC, trading, and withdrawal initiation,” noting that they are controlled by the Wazirx founding team. The CEO of Binance stressed, “This was never submitted despite our requests. The deal was never closed. No share transfers.
Czech Republic next tweeted:
If you have funds on Wazirx, you must transfer them to Binance. Just like that one. We could disable Wazirx wallets on a technical level, but we can’t/won’t do that. And no matter how much debate we have, we cannot/will not harm users.
What do you think of the situation that Indian crypto exchange Wazirx is in? Let us know in the comments below.
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