A major Indian cryptocurrency exchange, Wazirx, has had its bank assets of more than $8 million frozen by the Directorate of Enforcement (ED). The exchange was supposedly acquired by Binance in 2019. However, Binance CEO Changpeng Zhao (CZ) now claims that the acquisition was “never completed.” Wazirx, however, maintains that it was acquired by Binance.

India’s Directorate of Enforcement (ED) issued a press release Friday concerning Wazirx, a major crypto exchange in India. ED is a law enforcement and economic intelligence agency of the government of India. The announcement details:

ED stated that this action is part of its money laundering investigation against non-bank financial companies (NBFC) and their fintech partners for “predatory lending practices in violation of the RBI [Reserve Bank of India] guidelines.”

The announcement describes: “ED found that large amount of funds were diverted by the fintech companies to purchase crypto assets and then launder them abroad. These companies and the virtual assets are untraceable at the moment.”

ED alleged that Zanmai Labs created a web of agreements with Crowdfire Inc. (USA), Binance (Cayman Island), and Zettai Pte Ltd. (Singapore) “to obscure the ownership of Wazirx.” The authority further claimed that Wazirx gave “contradictory” and “ambiguous” answers “to evade oversight by Indian regulatory agencies,” noting that the exchange failed to provide crypto transactions of suspected fintech companies.

“Because of the non-cooperative stand of the director of Wazirx exchange, a search operation was conducted,” ED stressed. “It was found that Mr. Sameer Mhatre, director of Wazirx, has complete remote access to the database of Wazirx, but despite that he is not providing the details of the transactions relating to the crypto assets, purchased from the proceeds of crime of Instant Loan APP fraud.” The law enforcement agency further alleged:

“By encouraging obscurity and having lax AML norms, it has actively assisted around 16 accused fintech companies in laundering the proceeds of crime using the crypto route. Therefore, equivalent movable assets to the extent of Rs. 64.67 crore [$8.14 million] lying with Wazirx were frozen,” the ED announcement concludes.

Having seen media reports of his exchange being mentioned in connection with Wazirx, Binance CEO Changpeng Zhao (CZ) stated on Twitter that his company “does not own any equity in Zanmai Labs.”

Zhao claimed:

“Binance only provides wallet services for Wazirx as a tech solution. There is also integration using off-chain tx, to save on network fees. Wazirx is responsible all other aspects of the Wazirx exchange, including user sign-up, KYC, trading, and initiating withdrawals,” CZ explained.

“Recent allegations about the operation of Wazirx and how the platform is managed by Zanmai Labs are of deep concern to Binance. Binance collaborates with law enforcement agencies all around the world. We would be happy to work with ED in any way possible,” the Binance boss emphasized.

CZ’s clarification shocked many in the Indian crypto community since they were under the impression that Wazirx is a Binance company.

In an attempt to clarify the relationship between Wazirx and Binance, Wazirx founder Nischal Shetty insisted on Twitter that his exchange was indeed acquired by Binance.

He added that Zanmai Labs, an entity co-owned by him, has licensed from Binance to operate INR-crypto trading pairs on Wazirx while Binance operates crypto-to-crypto pairs and processes crypto withdrawals.

Asking investors not to confuse Zanmai Labs and Wazirx, he revealed that Binance owns the Wazirx domain name, has root access to its AWS servers, has all the crypto assets, and receives all the crypto profits.

Responding to Shetty’s tweets, CZ confirmed: “We could shut down Wazirx. But we can’t because it hurts users.” He added that Binance does not have operational control, including “user sign-up, KYC, trading and initiating withdrawals,” noting that they are controlled by Wazirx’s founding team. The Binance CEO stressed: “This was never transferred, despite our requests. The deal was never closed. No share transfers.”

CZ further tweeted:

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