‘No affiliations, unaware about purpose of transactions’, WazirX on latest ED probe

By | August 9, 2022

Days after the Enforcement Directorate (ED) probed WazirX, India’s largest cryptocurrency exchange, the company said that it has no affiliation with any users who indulge in illicit activities. This comes after the ED on Friday said it has seized Rs 65 crore after it found evidence against the company while investigating non-banking financial companies (NBFC) and their fintech partners indulging in predatory lending practices.

“ED appears to be investigating the transactions of certain users and Zanmai Labs  (the entity operating WazirX) has no affiliation to such users and is unaware about the purpose of their transactions. Zanmai Labs is in the position of any other intermediary whose platform may have been misused,” WazirX said in a public statement.

According to the ED, Chinese loan lending companies that were shut down in India diverted their funds through crypto exchanges, and the maximum amount of funds was diverted to the WazirX exchange.

The company also made it clear that it is owned by Zanmai Labs and Binance. Although, in a Twitter feud last week, Binance CEO Changpeng Zhao said that it does not own WazirX, and “only provides wallet services for WazirX as a tech solution.”

According to WazirX, it has a no-tolerance policy toward any illegal activities. “Users agree in the User Agreement to use WazirX in accordance with applicable law. Users are signed up on WazirX only after they complete the KYC process, including submitting proof of address and identity. Our KYC/AML terms and processes are available on the platform publicly,” the crypto exchange said, adding that it “does not accept any cash transactions.”

On Monday, Binance disabled off chain transaction this created a panic amongst users who wanted to transfer their funds from WazirX to Binance, without paying any gas fee. WazirX believes that there seems to be a major misunderstanding about off-chain transactions. “Off-chain transactions between WazirX and Binance can only be done by a user between his/her/its own account on the two platforms. Hence, KYC details are available for all off-chain transfers as well [and have been submitted to the ED when requested]. Off-chain withdrawals also cannot happen if the accounts are not KYCed. Law Enforcement Agencies (LEAs) can get complete information about the accounts involved in off-chain transfers,” the company added.

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