Binance denies role in WazirX hack, accuses CEO of misleading users

Binance has clarified its stance regarding its role in the WazirX fiasco, distancing itself from the company, while accusing the Indian exchange’s management of misleading users.

In a September 17 blog post, Binance reiterated that it does not own, control, or operate WazirX.

According to the world’s largest exchange, Nischal Shetty, one of the directors of WazirX’s parent company Zanmai, has made “misleading statements” about the exchange’s relationship with Binance.

Binance pointed out that India’s Enforcement Directorate has recognized Zanmai, an Indian company, as the owner of WazirX.

Zanmai was initially responsible for WazirX’s operations in India but is now fully owned by Zettai, according to the parent company.

Binance and WazirX: a long history

The relationship between Binance and WazirX dates back to November 2019 when Binance publicly announced it had acquired WazirX, intending to strengthen its presence in the Indian market. 

However, by August 2022, the relationship had soured.

The Enforcement Directorate of India froze WazirX’s assets, alleging money laundering activities, which led former Binance CEO Changpeng Zhao to declare that Binance never owned any equity in Zanmai Labs, the entity that operates WazirX. 

Back then, Zhao had publicly clarified that Binance did not fully acquire WazirX and only owned certain assets and intellectual property.

Since then, the two exchanges have been embroiled in a dispute over the extent of Binance’s ownership and responsibilities related to WazirX.

According to Binance’s recent statement, it had never completed its proposed acquisition of WazirX due to what it described as Zettai’s “failure to perform its obligations.”

While a contract had been signed, the exchange clarified that the acquisition was not finalized, and it only provided wallet services to WazirX as a technical solution. 

Binance also pointed out that it had instructed Zanmai to withdraw its funds from Binance wallets in January 2023, well before the hack occurred.

However, the current dispute began following the July 18 hack when Zettai applied to Singapore’s High Court for a moratorium to restructure its liabilities. 

In that filing Shetty claimed that Binance may be liable for losses suffered by WazirX users and creditors following the hack, suggesting that the outcome of their ongoing dispute might determine Binance’s ownership of WazirX, potentially turning Zettai’s creditors into Binance’s creditors.

WazirX must be ‘accountable to users’

Binance countered these claims, calling them “outrageously misleading,” stressing that it never managed WazirX’s operations.

Further, the exchange pointed out that the multi-signature wallet involved in the hack had signatories only from WazirX and its custody provider, Liminal.

It also added that in the ongoing dispute between the two parties Zettai and its affiliates “are not seeking a declaration that Binance is the owner, controller, or operator of WazirX.”

An excerpt from Binance’s blog added:

Mr. Shetty’s allegations make it clear that he is trying to deflect the blame [..] Binance feels compelled to correct several major inaccuracies to help the user community see the situation and its key facts more clearly.

Binance concluded its statement by urging WazirX to “be accountable to WazirX users” and compensate them for the funds lost under their management.

As of press time, WazirX has yet to respond to Binance’s claims.

Meanwhile, a hearing regarding Zettai’s application for a moratorium to restructure its liabilities is scheduled for Sept. 25 in the Singapore High Court.

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