Crypto exchange WazirX clarifies ‘off-chain transactions’ as ED pressure mounts

The disagreement between WaxirX and Binance comes as India’s Enforcement Directorate probes the former exchange

The disagreement between WaxirX and Binance comes as India’s Enforcement Directorate probes the former exchange | Photo Credit: Reuters

After India’s Enforcement Directorate (ED) issued orders to freeze ₹64.67 crores worth of crypto exchange WazirX’s bank deposits last week, the CEOs of WazirX and the crypto exchange giant Binance are under pressure to confirm whether WazirX is owned by Binance or not. They must also confirm whether transactions between them took place “off-chain.”

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The ED is probing WazirX, one of India’s largest crypto exchanges, which received a show cause notice to the tune of ₹ 2,790.74 crore last year.

WazirX said it has a “no tolerance policy” regarding illegal activities using its exchange and was “fully cooperating” with the ED. It also claimed there was a “major misunderstanding” about the off-chain transactions between WazirX and Binance.

“Off-chain transactions between WazirX and Binance can only be done by a user between his/her/its own account on the two platforms. Hence, KYC details are available for all off-chain transfers as well [and have been submitted to the ED when requested],” said part of the statement.

Binance CEO Changpeng Zhao earlier said Binance provided wallet services for WazirX, and that it could shut down the Indian exchange if it wished to do so. Mr. Zhao further urged WazirX users to move their funds to Binance.

WazirX CEO Nischal Shetty claimed that WazirX was acquired by Binance. But Mr. Zhao disagrees, stating Binance owned no shares belonging to Zanmai Labs, WazirX’s parent. 

WazirX’s statement also reported that it was co-operated by Zanmai Labs and Binance.

Since WazirX has been identified as a Binance-owned or Binance-acquired exchange, Mr. Zhao’s statements now paint a completely different picture of the relationship between the two crypto exchanges.

Furthermore, in keeping with Binance’s policy of complying with local regulators, off-chain transfers between the two exchanges will end tomorrow. While WazirX officials have assured users that their funds are safe and the exchange is solvent, trade volumes have plunged in recent days as many crypto investors fear a situation similar to that of the Celsius platform or Vauld. These platforms and several others abruptly froze user transfers and withdrawals amidst a liquidity crunch after the May 2022 crypto crash.

WazirX’s token WRX fell by 7.35% in the last day to $0.2253.

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Printable version | Sep 11, 2022 11:42:45 am |