WazirX, an India Crypto exchange, is now facing rough times as the financial watchdog of India, the Enforcement Directorate (ED), has frozen the company’s assets over the alleged laundering of illegal funds using cryptocurrencies. Moreover, a feud between the WazirX co-founder Nischal Shetty and Binance CEO Changpeng Zhao has also broken out on Twitter over ownership issues.
On August 3, Minister of State for Finance Pankaj Chaudhary told the Lok Sabha that the law enforcement agency was inquiring about alleged money laundering of Rs 2,790 crore through WazirX.
The feud between WazirX & Binance CEO
After the ED accused WazirX of laundering illegal funds using cryptocurrencies, Nischal Shetty said that his exchange only has an IP and preferential agreement with Binance because it acquired WazirX in 2019. However, Zhao has denied Binance holding any equity in WazirX and even the completion of its 2019 acquisition.
“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 – owned any shares of Zanmai Labs, the entity operating WazirX”, Zhao told ET in response to queries regarding the probe. “We would be happy to work with ED in any way possible should they reach out to us”, Zhao added.
While WazirX is the largest cryptocurrency exchange in India, handling over 50 percent of the country’s crypto trading volumes, there seems to be distrust amongst users after this shocking fiasco reveals. Nischal took to Twitter to reiterate that WazirX is still owned by Binance, while Zhao has been in complete denial of the situation. Zhao claims that Binance only provides crypto wallet services for the Indian crypto exchange.
As per Entrackr’s investigation, in the Indian entity, registered under the name of Zanmai Labs Private Limited, there are two shareholders: Zettai Pte Ltd and Nischal Shetty. Zettai Pte Ltd is the holding company of WazirX in Singapore, which owns 99% stake in the Indian entity, while the remaining 1% is owned by Nischal Shetty, the CEO of the exchange.
“Further, in the Singapore-based Zettai Pte Ltd (WazirX), the company has 3 stakeholders, including Nischal Shetty with 74.27%, Sameer Hanuman Mhatre with 18.56% and Siddharth Menon with 7.17% stake. In other words, holding practically 100% of the firm. The trio are co-founders of WazirX”, said the Entrackr report.
Coming back to the investigation, as per Chaudhary, “…investigation done so far has revealed that WazirX, operated by Zanmai Labs Private Limited in India was using the walled infrastructure of Cayman Island-based exchange Binance. Further, it has been found that all crypto transactions between these two exchanges were not even being recorded on the blockchains and were thus cloaked in mystery”.
WazirX still owes a proper clarification to its users about this mess-up. It was reported a couple of months back that Nischal Shetty and Siddharth Menon had shifted to Dubai from India. Moreover, it was reported that they have shifted their bases into the Middle East.