CoinDesk obtained emails that shed light on the ongoing controversy over WazirX’s opaque and disputable ownership.
In November 2019, WazirX’s ownership was uncontested. Binance, the largest crypto exchange in the world, published an article a blog post It claimed that it had bought the Indian exchange. WazirX executives spoke out about the acquisition.
The story changed last summer when WazirX was in trouble with the Indian government. Indian officials raided WazirX’s Mumbai headquarters in August amid suspicions that 16 fintech companies had been laundering money through the exchange.
Binance took immediate steps to distance itself publicly from WazirX. Binance’s initial celebration of the acquisition was published on their blog. Added to clarify: Instead, the transaction was “limited to an arrangement to purchase certain intellectual property.” Binance CEO Changpeng Zhao announced it on Aug. 5. Tweet Binance has no equity in Zanmai Labs. The entity that operates WazirX. A spokesperson for Binance stated to CoinDesk that WazirX reports claiming Binance owned WazirX are “a fabrication.”
There was much public back-and forth between Binance and WazirX over who owned the Indian exchange. Binance claimed the transaction did not go through. WazirX officials claimed it did. However, they never shared the proof.
CoinDesk received WazirX’s proof this week as the dispute was privately coming to an end.
Binance wrote WazirX in the early hours Jan. 26, the day before a national holiday, requesting that the Indian exchange meet two requirements by the end this month. Otherwise, Binance could terminate its service agreement with WazirX by February 3.
Binance first instructed WazirX that it publish a pre-written clarification statement retracting previous statements by Nischal Shetty, WazirX founder, claiming Binance owned WazirX. WazirX was also asked to remove all references to Binance from its terms of service.
In a letter obtained from CoinDesk, Zanmai (WazirX’s official title) responded to Binance’s demands on Friday. It responded by claiming that the demand letters was “unethical” as well as using “media pressure and threats” to force Zanmai to issue misleading statements and ‘clarifications.”
Refuse to Retract
Shetty, Binance’s CEO and legal team refused to retract previous statements that Binance had bought the Indian exchange.
According to the letter, “Zanmai did not make any misleading statements about Binance’s responsibility for operating WazirX and Binance’s control over WazirX’s user assets.” Binance was given control and ownership of the WazirX platform by Zanmai.
Shetty also stated in the letter, that Binance had made a handsome profit from its control over the exchange.
Shetty sent an email to Binance stating that Binance had unilaterally withdrew a significant amount of moneys (over USD67 million) earned through trading fees on WazirX. Since Binance was the owner of the WazirX wallets, Binance has transferred these amounts to its internal account.
Shetty attached an email chain, partially redacted, that was sent between Brian Schroder (CEO of Binance US) and Tushar Ptel (Vice President of Finance at WazirX), about an amended “sharepurchase agreement.”
This document was dated January 13, 2020 and grants Binance ownership rights to certain WazirX account (whose identities were redacted in the CoinDesk version reviewed).
“Sole Benefit of Binance”
According to the email chain the agreement allowed WazirX “access” to continue as before.[ing] Operate[ing] These accounts were created solely for Binance” and Binance was named as the “absolute owner(s).
After Patel had agreed to the purchase contract, Schoder wrote: “Thanks, Tushar. We will begin the transfer process and keep your updated.” CoinDesk did not receive any follow-up messages.
Binance demanded that WazirX comply with Binance’s demands. Binance’s demand letters made it clear that Binance will terminate their relationship if WazirX does not comply.
Both exchanges’ sources claim that such an outcome would likely destroy WazirX. According to WazirX’s proof of reserves report, Jan. 11, 90% of WazirX’s user assets are stored in Binance-controlled wallets.
Binance should receive funds you have on WazirX. It’s that simple. CZ tweets After the August raid on WazirX.
He said, “We could disable WazirX wallets at a technical level, but that’s not possible/won’t be done.” “And as many debates as there are, we can’t/won’t hurt users,” he said.
Danny Nelson contributed reporting.
CORRECTION (Jan. 28th, 2023, 02.38 UTC) Corrects Nischal Shetty’s spelling and corrects India’s Republic Day date.