Binance will stop offering its wallet and other tech services that it provided to WazirX, escalating tension with the Indian crypto exchange that it once sought to acquire.
The world’s largest crypto exchange cautioned on Friday that Zanmai, the firm that operates the WazirX exchange, has not fully withdrawn assets stored in the Binance wallets despite being made aware of the changing terms.
The escalation of the event has been prompted by what Binance asserts is Zanmai’s refusal to withdraw false narratives about its relationship with the larger firm.
“On 26 January 2023, we offered Zanmai a choice between retracting the false public statements (and continuing to use our services) or terminating the use of our wallet service. Since Zanmai has refused to clarify their misleading statements, Zanmai has till 3 February 2023 (23:59 UTC) to remove the funds from the accounts that they used for WazirX’s operations,” Binance wrote in a blog post.
Binance shook many in the crypto community in August last year when it revealed that it doesn’t own the India-based platform WazirX despite the two disclosing an acquisition years earlier.
Changpeng Zhao, founder and chief executive of Binance, said at the time that the company had been “trying to conclude the deal for the past few years,” but hasn’t completed the transaction yet citing “a few issues” that he declined to elaborate.
WazirX and its executives maintain that Binance has acquired the firm.
Binance says that its relationship with WazirX is limited to tech offerings and is not special. Binance has similar arrangements with “numerous other firms” that use Binance’s technology and infrastructure but independently run their businesses.
“The false and misleading narrative put forth to the public misrepresented Binance as maintaining control over WazirX users’ assets, user activity, and the platform’s operations,” Binance said Friday. “The reality, as we said time and time again, is that Binance provided Zanmai wallet services only as a tech solution for their operations of the WazirX exchange. Binance has never managed or controlled WazirX’s operations, including in relation to users’ assets and user activity.”
Binance said it has “invited” Zanmai as an exception to work out arrangements with the firm to withdraw any remaining assets after February 3 but whether such arrangements will materialize “ultimately lies with the Zanmai team.”
In a statement late Friday, a WazirX spokesperson said the firm has initiated the process of transferring assets to multi-sig wallets, which it expects to be fully completed within the next few hours. “Users can continue to trade, deposit & withdraw funds as usual. Your funds are safe with us,” the spokesperson added.
Direct customers of Binance are not impacted by the dispute between the firms, Binance said.
WazirX is one of the largest crypto exchanges in India. The firm processed over $10 billion worth of trades last year. Its dispute with Binance is only one of the headaches for the firm, which, like its local rivals CoinSwitch and CoinDCX, is also grappling with an increasingly hostile regulatory environment.
India’s tax rules on crypto, which went into effect last April, have resulted in local exchanges ceding the lion’s share of the market to those operated by foreign players, according to a report. Binance, Coinbase and other foreign exchanges commanded 67.6% of the crypto market share in India as of October 2022, up from 50% in November 2021, according to New Delhi-based think tank Esya.
All Indian exchanges have also seen trading volume on their platforms — their marquee business line — dwindle amid the new tax regime and ongoing market downturn.
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