WazirX Facing Money Laundering Accusations and Drama With Binance

  • Indian exchange WazirX has been accused by the Indian government of money laundering, prompting an investigation into the company.
  • The news is also opening up a dispute with crypto exchange Binance (BNB-USD).
  • While Binance announced its acquisition of WazirX in 2019, CEO Changpeng Zhao denies that this deal went through.
WazirX - WazirX Facing Money Laundering Accusations and Drama With Binance

Source: Dennis Diatel / Shutterstock

The crypto industry is trying to climb its way out of a deep rut, but drama just keeps piling up. Atop the price sinks, layoffs and bankruptcies washing over the market for the last three months, a new type of controversy has sparked. WazirX, an Indian crypto exchange, is the newest to face investigations of alleged illegal activity. However, the real controversy lies in a dispute between the company and Binance (BNB-USD). Is Binance being dishonest about its ownership of the platform? Or is WazirX overplaying Binance’s control over its operations?

WazirX isn’t just any crypto exchange in India — it’s the largest in the country. That’s a big deal, since India is one of the countries most aggressively leading the push into crypto. It is seeing the fastest rate of crypto adoption in the world in terms of first-time investors. The country sees billions upon billions of dollars in transactions per day. It’s no slouch when it comes to digital assets.

However, WazirX has been hit hard as a result of increased scrutiny by the Indian government. The massive 30% tax on crypto the country implemented this past spring has significantly damaged the platform’s numbers.

The company is being especially hampered today as it comes under government investigation. India’s Directorate of Enforcement, or ED, is freezing more than $8 million in user assets as it launches a probe into the exchange. The agency alleges WazirX engaged in money laundering, conspiring with Chinese-backed companies to undermine India’s crypto regulations.

Regardless of the truth, the news is another detrimental hit to WazirX. And to add insult to injury, the company is also clashing with Binance, who it asserts is the owner of the company.

WazirX and Binance Clash Amid Money-Laundering Probe

On top of this investigation, WazirX is embroiling itself in drama with Binance. Specifically, it insists the world’s largest crypto exchange is its controlling owner. Binance’s CEO, on the other hand, maintains that this claim is false and Binance has no relation to the platform.

The ED’s investigation into WazirX was first announced on Friday. This prompted Binance CEO Changpeng “CZ” Zhao to make a Twitter (NYSE:TWTR) thread addressing several key points relating to the Indian exchange.

In an effort to distance itself from WazirX during this investigation, CZ notes a 2019 Binance blog post announcing an acquisition of the company. He now says the transaction never went through and Binance owns no shares in the company. He goes on to explain Binance provides the company’s wallet services, and says that users should transfer these funds to Binance as soon as possible.

WazirX’s founder, Nischal Shetty, is responding to these claims by asserting that Binance does in fact own the platform. The result is a public back-and-forth exchange between the two on Twitter. CZ had even go so far as to halt off-chain transfers from Binance to WazirX in the aftermath of this dispute.

After a relatively quiet weekend, the dispute is growing once again. Shetty is reporting this morning that transfers are open again for users; Binance says it is preparing to shut them down once again. The company is siding explicitly with the ED, moving to assist it with the money laundering investigation.

It is worth noting Binance is also the subject of money laundering accusations. Reports say the exchange helped North Korean state-backed hacking outfit Lazarus Group with moving stolen funds through its exchange.

On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.


Article printed from InvestorPlace Media, https://investorplace.com/2022/08/wazirx-facing-money-laundering-accusations-and-drama-with-binance/.

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