OPEN APP
Home / Markets / Cryptocurrency /  WazirX account freeze, ownership mess: Will it affect user funds?
Listen to this article

Crypto experts in the country have raised concerns after the Enforcement Directorate froze cryptocurrency exchange WazirX’s bank balances worth 64.67 crore and Binance founder denied owning Zanmai Labs, the entity operating WazirX.

ED has accused WazirX of assisting 16 Indian fintech firms, already under investigation by the agency, in laundering proceeds of crime by transferring the money to unknown foreign wallets.

On the other hand, a full-blown war has broken out on Twitter between WazirX founder Nischal Shetty and Binance founder Changpeng Zhao.

Zhao in a tweet on Friday said that the transaction to acquire WazirX was never completed, which has been countered by Shetty.

According to Shetty, WazirX was acquired by Binance and Zanmai Labs is an India entity owned by Shetty and his co-founders. “Zanmai Labs has license from Binance to operate INR-Crypto pairs in WazirX. Binance operates crypto to crypto pairs, processes crypto withdrawal…," Shetty said in a tweet.

Meanwhile, Zhao on Saturday tweeted that if users had funds on WazirX, they should transfer it to Binance. “We could disable WazirX wallets on a tech level, but we can’t/won’t do that. And as much debates as we are enduring, we can’t/won’t hurt users," Binance founder tweeted.

Crypto entrepreneur and Coin Crunch India CEO, Naimish Sanghvi, said, “It’s a very convoluted situation, in a sense that Binance owns access to WazirX, but they don’t have any equity in Zanmai Labs, on which WazirX operates the crypto-INR market. It’s now CZ (Zhao) word versus Nischal’s word."

Meanwhile, Kashif Raza, founder of crypto education startup Bitinning, also questioned the timing of Binance coming out with a statement that it does not own any equity in Zanmai Labs, the entity operating WazirX.

“Why now and why not earlier or later? Why come out with this statement at a time when there is an investigation going on? Now, Nischal has also clarified that even revenues and profits are also going to Binance only. It is one of the most difficult times the industry is going through and this event will not do good to the overall growth of this industry," Raza said.

Amid the confusion, some experts have become cautious.

“Amid all this chaos, how can a user have trust in an exchange where the founder and person who owns it are having an open battle on Twitter?," one crypto expert said on the condition of anonymity.

Meanwhile, WazirX in a statement has said that currently the deposits and withdrawals on the exchange are working as usual.

“We have been fully cooperating with the Enforcement Directorate (ED) for several days and have responded to all their queries fully and transparently. We do not agree with the allegations in the ED press release. We are evaluating our further plan of action,“ the statement added.

Meanwhile, Shetty on Saturday assured users that crypto and rupee deposits on WazirX were safe.

In the past as well, WazirX had maintained that the investors will not lose the custody of their tokens, as they are stored in a separate custodial wallet. “We are a transaction execution platform with no control over clients‘ assets. Hence, subject to clause 9.2 of the Terms of Service of our Platform, investors have exclusive rights, title and ownership of their cryptocurrency," WazirX had told Mint earlier.

On users‘ funds getting affected by ED freeze, Sanghvi said, “It’s only 64 crore, it seems too less for it to be users’ money. There could be at least 200 crore- 250 crore in INR deposits on WazirX."

However, some experts are cautious.

“The rupee withdrawals are going on for customers, but I don’t know how long that can continue. Based on media reports, it seems that ED hasn’t frozen all the accounts. If a large number of withdrawals start happening, then there might be a situation where users might get affected," said Ajeet Khurana, founder of Reflexical, a Web 3.0 company, and a global crypto advisor.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout