Binance chief Changpeng Zhao (CZ) has started a dispute with WazirX co-founder Nischal Shetty. Binance claimed to have acquired India’s largest crypto exchange in November 2019. Now, after the government raided WazirX, Binance claims the acquisition never consummated.
CZ claims that WazirX refused to transfer control of its source code and administrative credentials even though Binance requested it as a suitor during the merger process. As a result, CZ claims that Binance does not currently own WazirX.
Shetty refutes CZ’s claims, saying that WazirX sold its technology to Binance and that Binance is responsible for payments. He says he cannot comment further for legal reasons.
WazirX has legal issues in India
WazirX initially appeared on the Enforcement Directorate’s radar in June 2021. The Enforcement Directorate was investigating allegations of money laundering by illegal online betting organizations based in China. It issued a notice requesting information on transactions worth 27.91 billion Rupees ($382 million) under India’s Foreign Exchange Management Act.
At the time, WazirX denied receiving any “show cause” notice from the Enforcement Directorate. A show cause notice requires private entities to appear in court to explain their side of an issue.
The Indian government raided properties owned by WazirX director Sameer Mhatre and froze $8.1 million in WazirX funds before CZ distanced Binance from WazirX.
India’s Enforcement Directorate alleges that WazirX:
- Laundered money for 16 fintech firms accused of financial crimes.
- Provided confusing and contradictory information about its operations and obscured information about its ownership.
- Failed to turn over the crypto transactions of certain suspect businesses or bank accounts.
Shetty claims that WazirX’s Singapore-based parent company, Zettai, and Binance have discussed the ownership issue for several months. He has rejected a joint venture offer, insisting that acquisition is legally binding.
Both companies proclaimed the acquisition occurred
In the past, both parties have repeatedly stated that Binance acquired WazirX. However, CZ now alleges the firm never completed the transaction.
Binance announced the acquisition in a blog post dated November 20, 2019. It planned to use the so-called Binance Fiat Gateway to enable Indian residents to buy and sell digital assets using the Indian Rupee.
On August 5, 2022, Binance amended its blog post to clarify that it bought assets and intellectual property belonging to WazirX and does not own any equity in Zanmai Labs, which is the operator of WazirX. Zanmai Labs is a subsidiary of Zettai, the ultimate parent company over both.
Binance also claims that it does not control WazirX’s operations. It outsourced the work to Zanmai Labs. Some of WazirX’s original creators founded Zanmai Labs as a subsidiary of Zettai.
Shetty claims that WazirX sold its technology, brand, domain, and product. He says he has legal documents to prove the acquisition occurred and that he can show a license to operate trading between the Indian Rupee and digital assets on WazirX.
Journalist and crypto critic Jacob Silverman accused CZ of being “evasive” about who owns WazirX.