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Monday, August 8, 2022

After the ED probe, Binance said it never owned WazirX in a major revelation.

The acquisition of WazirX by Binance was understood to be closed in 2019 after Binance posted a blog announcing the same.

Changpeng Zhao, the CEO of US-based crypto exchange Binance, said on August 5 that the company does not own Indian crypto exchange WazirX, a deal that was understood to be completed in 2019.

Zhao tweeted, “Binance does not own any equity in Zanmai Labs, the entity operating WazirX and established by the original founders.”

The understanding was that the deal had been closed after Binance published a blog in 2019 saying it had acquired WazirX. Zhao, however, said that the transaction was never completed.

“Binance only provides wallet services for WazirX as a tech solution. There is also integration using off-chain tx, to save on network fees. WazirX is responsible for all other aspects of the WazirX exchange, including user sign-up, KYC, trading, and initiating withdrawals,” he tweeted.

Zhao blamed ‘a few’ issues due to which both parties could not conclude the deal. He further said it is difficult to disclose why the deal was not closed.

This comes hours after the Enforcement Directorate (ED) said it has frozen bank assets of WazirX worth Rs 64.67 crore. The central agency took action against the WazirX Director for assisting the accused instant loan app companies in laundering fraud money via the purchase and transfer of virtual crypto assets.

Both companies had not disclosed the amount of the deal in 2019. In the blog post announcing the acquisition in 2019, Binance had said that by the first quarter of 2020, WazirX’s auto-matching engine was to be integrated into the Binance Fiat Gateway. The integration would have paved the way for Binance users to to purchase Tether (USDT) against the Indian Rupee.

Last week, the Ministry of Finance told the Rajya Sabha that the ED is investigating two cases against WazirX under the provisions of Foreign Exchange Management Act, 1999 (FEMA). The ministry added that Zanmai Labs, which operates WazirX, was using the walled infrastructure of Binance.

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