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Binance Refuses Ownership, Crypto Exchange Issues Statement; What We Know

World’s largest cryptocurrency exchange by trading volume, Binance, has said that it does not own a stake at WazirX, hours after the Enforcement Directorate froze assets of Sameer Mhatre, a director of Zanmai Lab Pvt Ltd, the company that operates WazirX. The Enforcement Directorate (ED) on Friday said it has frozen Rs 64.67 crore worth bank deposits of one of India’s prominent crypto currency exchanges WazirX as part of an ongoing money laundering probe against some fraud smartphone-based loan dishing apps “backed by” Chinese funds.

Here is what we know so far about the WazirX raid and the subsequent Binance row.

ED Raids WazirX

The ED said on Friday that it conducted raids against Sameer Mhatre, a director of Zanmai Lab Pvt Ltd (which owns WazirX) on August 3 as he was not forthcoming with information being sought from him and was “non-cooperative”. It said the exchange and its executives were “giving contradictory and ambiguous answers to evade oversight by Indian regulatory agencies”.

“Their Managing Director Mr Nischal Shetty had claimed that WazirX is an Indian exchange which controls all the crypto-crypto and INR-crypto transactions and only has an IP and 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 said.

“We have been fully cooperating with the Enforcement Directorate(ED) for several days and have responded to all their queries fully and transparently. We do not agree with the allegations in the ED press release. We are evaluating our further plan of action,” a spokesperson for WazirX told News18 on Saturday.

Binance Founder Denies Link With WazirX

Shortly after the news, Binance founder Changpeng Zhao said it had no links with WazirX and does not own any stake at Zanmai Labs. “Binance does not own any equity in Zanmai Labs, the entity operating WazirX and established by the original founders,” he said.

“On 21 Nov 2019, Binance published a blog post that it had “acquired” WazirX. This transaction was never completed. Binance has never – at any point – owned any shares of Zanmai Labs, the entity operating WazirX,” Zhao added.

WazirX is responsible all other aspects of the WazirX exchange, including user sign-up, KYC, trading and initiating withdrawals and Binance only provides wallet services for WazirX as a tech solution, he said further. “Recent allegations about the operation of WazirX and how the platform is managed by Zanmai Labs are of deep concern to Binance. Binance collaborates with law enforcement agencies all around the world. We would be happy to work with ED in any way possible,” Zhao said.

WazirX Founder Counters Binance Claim

WazirX founder Nischal Shetty on Friday countered Zhao’s claim and said that the platform was acquired by Binance. “Zanmai Labs has license from Binance to operate INR-Crypto pairs in WazirX,” he said. WazirX is “still owned by Binance,” Shetty said.

WazirX, last year, got a Rs 2,790 crore worth show cause notice from the ED for alleged contravention of the Foreign Exchange Management Act (FEMA).

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