Binance and WazirX Promise to Cooperate With ED on Ownership and ‘Shady’ Transactions  

After the unanticipated public spat between Binance CEO Changpeng Zhao (CZ) and WazirX CEO Nischal Shetty on Saturday over the ownership of WazirX, most Indian business news platforms prominently provided a follow-up on the issue on Monday.

Money Control carried an article based on an interview with Shetty in which he said legal documents are in place to prove Binance owns WazirX. At the same time, The Economic Times reported that Zanmai Labs, which operates WazirX, is contemplating legal recourse in the ownership dispute with Binance.

WazirX has about 15 million registered users and is believed to be the largest Indian crypto exchange by volume.

Dispute on WazirX Ownership

The latest flare-up follows the raid by the Directorate of Enforcement (ED) on one of the directors of Zanmai Labs on Friday and the freezing of a bank account with $8 million in balance. As the ED gradually moves to take decisive action in the case, WazirX CEO is seen shifting the onus on Binance, which had admitted in an official blog in 2019 to have taken over the India-focused trading platform.

By now, Binance CEO distancing himself from WazirX ownership through his tweets on Saturday has become trending news in the crypto space. CZ said the 2019 acquisition was never complete, and Binance’s involvement with WazirX was limited to providing technical solutions such as wallet service and off-chain transactions.

“We could shut down WazirX. But we can’t… It hurts users,” CZ tweeted on Saturday.

According to The Economic Times report, Binance disabled off-chain crypto transfers to WazirX on Sunday.

Cooperation With ED

In his tweets on Saturday, CZ expressed dismay at allegations against WazirX and said Binance would cooperate with the ED.

“Recent allegations about the operation of WazirX and how the platform is managed by Zanmai Labs are of deep concern to Binance. Binance collaborates with law enforcement agencies all around the world. We would be happy to work with ED in any way possible,” CZ tweeted on Saturday.

In his interview with Money Control, Shetty also reasserted that he would cooperate with the ED investigation. “We have been constantly cooperating with the (ED’s) investigation and will continue to cooperate,” he noted.

Root of the Problem  

The Directorate of Enforcement (ED), a federal agency with an official mandate to investigate financial crimes having a terror-funding angle, said in January that it was investigating suspicious money laundering transactions to the tune of INR 2,700 crore ($381 million) by some private companies through WazirX.

It issued a formal charge sheet in the case against WazirX co-founders Nischal Shetty and Sameer Mhatre in June, asking them to explain the suspicious transactions. WazirX’s CEO maintained that his platform goes beyond KYC to ensure compliance with the existing laws.

“We go beyond our legal obligations by following Know Your Customer (KYC) and AML processes and have always provided information to law enforcement authorities whenever required,” Shetty replied.

However, in its June charge sheet, the ED said, “WazirX does not collect the requisite documents in clear violation of the basic mandatory Anti Money Laundering (AML) and Combating of Financing of Terrorism (CFT) precaution norms and FEMA guidelines.”