Have No Affiliation With Users Under ED Probe Into WazirX: Zanmai Labs

Zanmai Labs, which operates WazirX, on Tuesday (August 9) said that it has no affiliation with the users that are under the investigation of the Enforcement Directorate (ED) for the transactions carried out on the crypto exchange. 

“ED appears to be investigating the transactions of certain users and Zanmai Labs has no affiliation to such users and is unaware about the purpose of their transactions. Zanmai Labs is in the position of any other intermediary whose platform may have been misused,” the company said in a statement.

Zanmai Labs also said that the WazirX platform is co-operated by it and Binance. It said it has fully cooperated with the ED for ‘several days’ and has responded to all the queries ‘fully and transparently’.

The cryptocurrency exchange also said that it has a ‘no tolerance policy’ towards any illegal activities through WazirX. 

“Users agree in the User Agreement to use WazirX in accordance with applicable law…Our KYC, AML terms, and processes are available on the platform publicly. For every transaction, we are able to produce the KYC details of the relevant user,” it said. 

Following cessation of off-chain transactions with WazirX by Binance on Monday, Zanmai Labs said that off-chain withdrawals on its platforms are not processed in the absence of valid KYC (know your customer) documents.

“…there seems to be a major misunderstanding about off-chain transactions between WazirX and Binance. Off-chain transactions between WazirX and Binance can only be done by a user between his/her/its own account on the two platforms. Hence, KYC details are available for all off-chain transfers as well (and have been submitted to the ED when requested),” Zanmai Labs said. 

Off-chain fund transfers are transactions occurring outside the blockchain network. 

Zanmai Labs further said that it would continue to cooperate with the law enforcement agencies, adding that the authorities can get complete information about the accounts involved in off-chain transfers on the platform.

Who Owns WazirX?

The matter at the heart of the controversy pertains to the ownership of the cryptocurrency exchange WazirX. In 2019, Binance publicly announced the acquisition of WazirX, but distanced itself from the startup after the ED launched a crackdown against WazirX on August 5. 

The ED froze bank balances of the directors of Zanmai Labs to the tune of INR 64.67 Cr as part of its investigation. Close on the heels of that, Binance severed all ties with Zanmai Labs, with the former’s CEO Changpeng Zhao even denying owning any equity in the latter.

According to WazirX’s updated user agreement, Binance and Zanmai together run the crypto exchange. Zanmai Labs reiterated this in its statement on Tuesday. Last week, a war of words broke out between Zhao and WazirX CEO Nischal Shetty over the ownership of the exchange.

Meanwhile, the ED in a statement on August 5 stated that its probe into WazirX found that Zanmai Labs created several agreements with Crowdfire Inc. USA, Binance (Cayman Islands), Zettai Pte Ltd Singapore ‘to obscure the ownership of the crypto exchange’.

The agency is probing WazirX in a money laundering case. The ED has alleged that the crypto exchange assisted instant loan apps in laundering money and the crypto platform was used by the companies operating these apps to buy cryptocurrencies through public’s money.

WazirX is India’s largest crypto exchange and had an annual trading volume of $43 Bn in 2021.