WazirX VS Binance: Impacts on Indian NFT world

WazirX vs Binance

WazirX VS Binance: Impacts on Indian NFT world  

WazirX VS Binance has recently made headlines, but not for good reasons. The argument between WazirX and Binance left the Indian NFT community concerned. In this article, we will learn more about recent developments and how it impacts the Indian NFT community.

WazirX VS Binance : What actually happened?

It all started after The Directorate of Enforcement (ED) searched one of the Directors of M/s Zanmai Lab Pvt Ltd, which owns the well-known cryptocurrency exchange WazirX and NFT marketplace. ED has ordered the freezing of their bank accounts totaling INR 64.67 Crore

The Directorate of Enforcement (ED) is in charge of upholding certain provisions of the Prevention of Money Laundering Act and the Foreign Exchange Management Act, 1999 (FEMA).

On 05-08-2022 ED issued a statement regarding the Searches. According to the press release by ED, a number of Indian NBFC companies and their fintech partners are being investigated by the ED for money laundering due to aggressive lending practices that are against RBI norms (Reserve bank of India).

Further,  When conducting a fund trail investigation; ED discovered that fintech companies had diverted a huge sum of money to buy crypto assets and subsequently launder them abroad. These businesses and the virtual assets are currently untraceable.   The majority of the cash were observed to have been routed to the WazirX exchange, and the cryptocurrency assets so purchased have been transferred to undisclosed international wallets. 

Following are the observation made by ED during the investigation: 

  • Zanmai Labs Pvt Ltd, the company owning WazirX Crypto Exchange – has created a web of agreements with Crowdfire Inc. USA, Binance (Cayman Islands) and Zettai Pte Ltd Singapore. To obscure the ownership of the crypto exchange. Earlier, their Managing Director Mr Nischal Shetty had claimed that WazirX is an Indian Exchange which controls all the crypto-crypto & inr-crypto transactions and only has an IP & preferential agreement with Binance. But now, Zanmai claims that they are involved in only inr-crypto transactions, and all the other transactions are done by Binance on WazirX. They are giving contradictory & ambiguous answers to evade oversight by Indian regulatory agencies.
  • WazirX works from a Cloud based software (@AWS Mumbai), all employees work from home, the registered office is a 2 Chair coworking Wework space, and all crypto-crypto transactions are controlled by Binance {which is again without any known office or any known employee. And rarely responds to queries on [email protected]}. 
  • Despite giving repeated opportunities, WazirX failed to give the crypto transactions of the suspect fintech APP companies and reveal the KYC of the wallets. Most of the transactions are not recorded on the blockchain also.
  • WazirX informed that prior to July 2020, they did not even record the details of the Bank Account from which funds were coming into the exchange to purchase crypto assets. No physical address verification is done. There is no check on the source of funds of their clients. No EDD is done. No STRs were raised.

Who owns WazirX?

WazirX is owned by Zanmai Labs. Directors of Zanmai Labs are Nishal Shetty and Sameer Hanuman Mhatre. Whose registered office is located in Mumbai, India. 

Zenmai Lab is owned by ZETTAI PTE. LTD. ,which is a Singapore based company. Nischal Shetty owns a major stake of 74%, with Sameer Hanuman Mhathre and Siddarth Menon holding the rest of the shares.

However, according to reports by Moneycontrol : The payslip issued to the employees of WazirX, doesn’t mention either WazirX or Zanmai. Instead it mentioned Qizil21 Softwares Private Limited.

Qizil21 Softwares is located in Mumbai India. Its directors are Moujhuri Guha (Nischal’s wife), Sameer Hanuman Mhathre and Nischal Shetty. Nischal and Moujhuri have major stakes in this company.

Nonetheless, in November 2019 Binance had made an announcement claiming that it owns WazirX. Following the announcement of the acquisition, neither Binance nor WazirX made any other comments on the subject, which led to the widespread belief that Binance had actually bought WazirX. Zhao even shared posts on Twitter that described WazirX as a “Binance-owned Indian cryptocurrency exchange.” But, according to his recent tweets; He claims that Binance doesn’t own any equity in Zanmai Labs. 

Twitter war between Nischal Shetty and ChangPeng Zhao:

After the ED statement was released, Binance CEO ChangPeng Zhao and WazirX CEO Nischal Shetty, took to twitter to clarify the ownership of Zanmai Labs, which is parent entity of WazirX. With ED investigating the company, both the CEO of Binance and WazirX are claiming that “we are not the owner of WazirX”. Following tweets suggest the same:

How will WazirX VS Binance affect the Indian NFT community?

Along with the crypto market fall and new taxation policies for web3 transactions, the Indian web3 community has been witnessing the fall in trade volume. The NFT community now faces even more issues as a result of this ongoing dispute.

Binance CEO suggested his twitter followers transfer funds from WazirX to Binance.

If you have funds on WazirX, you should transfer it to Binance. Simple as that.

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.”

As of now the conflict of giants left the NFT community confused. Following the asset freezing. There is an uneasiness in the user’s mind.

WazirX’s platform’s native token, the WRX coin, faced a decline in its value. Users are also concerned about Binance delisting the currency.

However, WazirX CEO assured its users that their crypto and INR in WazirX are safe. But until the ED investigation doesn’t come to an end the users are confused about their next move. 

It is important to know that WazirX is one of the biggest platforms in India. It features the most popular Indian NFT artists along with emerging artists from every corner of India. With the current situation escalating day by day, the Indian NFT community hopes for the best outcome, which favor its growth. 

Also read our article on Abhishek Bhaskar: Indian NFT Artist & Beatboxer.

Check-out Top selling NFTs by Indian Artists.

Sources:

ED press release

MoneyControl