Binance Ceases Off-Chain Fund Transfer With WazirX

SUMMARY

Users will still be able to deposit and withdraw balances via the standard withdrawal and deposit process between Binance and WazirX: Binance

Binance said that some users were made to believe that funds deposited in WazirX were managed by the former, which is not the case

Last week, amid a probe by the ED, Binance denied having any stake in the Indian crypto exchange, saying the 2019 acquisition deal between the exchanges was never closed

Cryptocurrency exchange Binance on Monday (August 8) said that it is removing the off-chain fund transfer channel between the company and WazirX following the Enforcement Directorate’s (ED) recent regulatory action against the latter.

The development comes days after the ED froze WazirX’s bank assets in an alleged money laundering probe. Following this, Cayman Islands-based Binance denied its acquisition of WazirX.

“Effective from 2022-08-11 03:00 (UTC), Binance will cease to support off-chain fund transfers between WazirX Exchange and Binance via the “Login with Binance” option,” Binance Chief Communications Officer Patrick Hillmann said in a statement on Monday. “Users will still be able to deposit and withdraw balances via the standard withdrawal and deposit process between Binance and WazirX.”

The foreign cryptocurrency exchange once again said that some users were made to believe that funds deposited in WazirX were managed by the former, which is not the case.

Off-chain fund transfer refers to a cryptocurrency transaction that moves the value outside of the blockchain.

Binance believes in keeping an open dialogue with regulators, policymakers and the law enforcement community as we collectively seek to establish a global regulatory framework for the industry,” Hillmann said adding that the company will keep supporting Indian regulators in the ongoing matters concerning WazirX.

Binance-WazirX Deal Debate

In November 2019, Binance announced acquisition of WazirX. However, on August 5, after the Indian crypto exchange came under the ED probe, the former’s CEO Changpeng Zhao denied owning any equity in Zanmai Labs, the entity operating WazirX.

Zhao said that the deal was never closed.

Meanwhile, responding to Zhao’s tweet, WazirX CEO Nischal Shetty said that while Binance had no stake in Zanmai Labs, the company did acquire WazirX.

Besides, the Indian crypto exchange’s updated user agreement shows that Binance and Zanmai were together running WazirX.

Meanwhile, the ED, in a press statement on freezing WazirX’s assets, said that its investigation found that Zanmai Labs, the company owning WazirX, created several agreements with Crowdfire Inc. USA, Binance (Cayman Islands), Zettai Pte Ltd Singapore “to obscure the ownership of the crypto exchange”.

It also said that Zanmai Labs was giving “contradictory” and “ambiguous” answers to evade oversight by Indian agencies.

“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,” the ED added.

The regulatory agency issued an order to freeze WazirX’s bank assets to the tune of INR 64.67 Cr.

The ownership dispute and the ED’s actions can also lead to the suspension of WazirX’s services, according to experts.

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