WazirX Seeks Help From Binance To Bail Out Customers

SUMMARY

Binance confirmed that it is in communication with WazirX since the crypto heist on July 18 to support the latter’s incident response effort

However, a Binance spokesperson told Inc42 the crypto exchange does not control any aspect of WazirX’s business or operations

It is pertinent to note that WazirX is involved in a legal battle with Binance

Update | July 30, 05:45 PM: The story has been edited to add Binance’s response.

Caught in the midst of a $230 Mn crypto heist, cryptocurrency exchange WazirX has reportedly approached Binance for help to bail out the affected customers.

Citing industry sources, Moneycontrol reported that Binance controls a surplus of WazirX’s revenue and its crypto token WRX.

It is pertinent to note that the exchange is involved in a legal battle with Binance.

“Their legal dispute is still ongoing. There are components of WazirX’s business which are still under Binance’s control, including the revenue — the surplus of it. Even its WRX token is under their control. So they have reached out to Binance and the talks are on but at early stages,” a source was quoted as saying.

The report added that Binance held $80 Mn worth WazirX tokens on the day of the crypto hack. This compromised WazirX’s capability to use its own funds to pay back some part of the customer assets.

However, Binance said it does not control any aspect of WazirX’s business or operations. Responding to Inc42’s queries on the development, the crypto giant said that it has been in communication with WazirX since July 18.

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“We have been in communication with the WazirX team since July 18 to support their incident response effort… Binance does not manage or control any aspect of WazirX’s business or operations, including WazirX’s user funds,” a company spokesperson told Inc42.

WazirX is yet to revert to Inc42’s queries on the matter.

WazirX’s crypto debacle happened on July 18 when a security breach impacted one of its wallets Safe Multisig on the Ethereum network, resulting in the loss of user funds.

Following this, WazirX cofounder Nischal Shetty said North Korea’s Lazarus Group was likely behind the heist. The North Korean group is known for carrying out some of the world’s largest crypto exchange attacks in the past.

While users are pressuring WazirX to pay them back, US’ Federal Bureau of Investigation (FBI) has also initiated its probe on the nature of the cyberattack.

Besides initiating bail out discussion with Binance, the exchange has also announced a prize of $23 Mn as a part of its bounty programme to recover the assets stolen during the attack. This bounty programme will be active for three months starting from July 21, with the potential for extension or reduction based on the progress of the recovery, the company said in a statement.

However, Binance and WazirX have been on each other’s throats since the past few years. WazirX was supposedly acquired by Binance in November 2019. However, Binance CEO Changpeng Zhao said in 2022 that his company did not acquire WazirX. Zhao’s statement came after the Enforcement Directorate froze WazirX’s assets worth INR 64.67 Cr in connection with a money laundering case.

However, WazirX Shetty refuted this and said owns WazirX’s domain name, root access to AWS servers, crypto assets and crypto profits.

Subsequently, Binance terminated wallet services for Zanmai Labs, parent entity of WazirX, in 2023. The crypto giant directed Zanmai Labs to withdraw all funds held in Binance wallets for WazirX’s operations.

Later, Shetty said he would seek legal recourse against Binance. “The allegations made by Binance in their blog are false and unsubstantiated. As far as Binance’s actions are concerned, we are taking the necessary steps to seek recourse and protect our legal rights,”