The Directorate of Enforcement (ED) announced in January that it was looking into allegedly suspicious money laundering transactions involving some private companies through WazirX
Following the unexpected public altercation between WazirX CEO Nischal Shetty and Binance CEO Changpeng Zhao (CZ) on Saturday regarding WazirX’s ownership, the majority of Indian business news sites prominently covered the topic on Monday.
The incident on Saturday comes after an investigation by the ED into one of Zanmai Labs’ directors and the Friday freeze of a bank account with an $8 million amount.
According to Shetty in an interview published by Money Control, legal proof that Binance owns WazirX can be found in the documentation. At the same time, The Economic Times claimed that Zanmai Labs, the company behind WazirX, is considering taking Binance to court over control of the platform.
With roughly 15 million registered members, WazirX is thought to be the biggest cryptocurrency exchange in India in terms of volume.
Conflict over WazirX Ownership
The most recent incident comes after a Friday raid by the Directorate of Enforcement (ED) on one of Zanmai Labs’ directors and the subsequent freeze of a bank account with an $8 million amount. WazirX CEO is seen transferring the blame to Binance, which confirmed in an official blog post in 2019 to have taken over the India-focused trading platform, as the ED moves progressively to take serious action in the matter.
The CEO of Binance’s remarks on Saturday that he was separating himself from WazirX ownership are currently dominating in the cryptocurrency world. The 2019 acquisition, according to CZ, was never fully accomplished, and Binance’s cooperation with WazirX was restricted to offering technical solutions like wallet service and off-chain transactions.
“We could shut down WazirX. But we can’t… It hurts users,” CZ tweeted on Saturday.
The Economic Times reported that Binance stopped allowing off-chain cryptocurrency payments to WazirX on Sunday.
Working with the ED
CZ expressed shock at the allegations made against the Indian cryptocurrency exchange in his tweets on Saturday and pledged that Binance will assist the ED.
Shetty reiterated that he will assist the ED inquiry in his interview with Money Control. He stated, “We have been constantly cooperating with the (ED’s) investigation and will continue to cooperate,”
The cause of the issue
The Directorate of Enforcement (ED), a federal agency with the official responsibility to look into financial crimes with a connection to terrorism funding, announced in January that it was looking into allegedly suspicious money laundering transactions involving some private companies through WazirX totaling INR 2,700 crore ($381 million).
In June, it officially filed charges against the exchange co-founders Nischal Shetty and Sameer Mhatre, requesting that they provide an explanation for the questionable transactions. The CEO of WazirX insisted that his platform goes above and beyond KYC to guarantee adherence to current regulations.
“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.
WazirX, however, “does not gather the necessary documentation in clear contravention of the basic mandatory Anti Money Laundering (AML) and Combating of Financing of Terrorism (CFT) cautionary regulations and FEMA instructions,” according to the ED’s charge sheet from June.
