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Since Friday, Changpeng Zhao and Nischal Shetty, the CEOs of Binance and WazirX respectively, have been at loggerheads on Twitter over who owns the beleaguered Indian crypto exchange.

While Zhao claims that the Chinese crypto exchange never completed the transaction, Shetty claims that Zhao’s company ‘effectively’ owns WazirX.

On Friday (August 5), the Enforcement Directorate (ED) said in a press statement that it had raided the offices of WazirX and discovered ‘incriminating evidence’ related to facilitating money laundering by instant loan apps. The ED also froze WazirX’s assets worth INR 64.67 Cr.

Later, on the same day, Binance’s CEO Zhao shared in a tweet that the Chinese crypto exchange never owned equity in Zanmai Labs, the alleged parent company of WazirX. Zhao added that Binance will support ED’s investigation, prompting Shetty to revert.

Shetty stated that Zhao’s exchange owns WazirX’s domain name, root access to AWS servers, crypto assets and crypto profits, adding that Binance can shut down the Indian exchange any day they want to. 

Further, Shetty implied that WazirX and Zanmai Labs are two different, seemingly unrelated entities. Shetty’s statements raised questions about the ownership of his startup, which has led to a Twitter row between Zhao and Shetty.

The subsequent argument over Twitter went into the little details of who does what in WazirX, but neither Zhao nor Shetty talked about who owns WazirX. This ambiguity surrounding the ‘acquisition’ in 2019 and the subsequent denial almost three years later has sent alarm bells ringing throughout the WazirX user community. 

According to WazirX’s 2021 report, the crypto exchange claimed to have more than 10 Mn users, having facilitated transactions worth $43 Bn in the process. This means that a significant chunk of India’s crypto investors is now in the dark about the situation that is unfolding at WazirX.

Is There A Need To Panic?

Amid the war of words between Zhao and Shetty, the Binance CEO set alarm bells ringing by saying that the Chinese crypto exchange could have shut WazirX down but didn’t.

“We could shut down WazirX. But we can’t, because… it hurts people,” Zhao said.

This was further exacerbated by a follow-up tweet from Zhao, in which he urged WazirX users to transfer funds to Binance.

Zhao even went on to say that Binance would work with ED to solve issues such as KYC and user data.

A couple of days ago, however, Binance shut down off-chain transactions for users. Off-chain transactions enabled users to transfer funds internally between WazirX and Binance free of cost, an ability that the Chinese crypto exchange pulled the plug on.

In response to Binance’s action, the Indian crypto exchange introduced a transfer fee for users seeking to transfer funds to the Chinese crypto exchange.

However, amid all this, WazirX has asked users to remain calm.

“In light of recent news about WazirX, we wanted to assure you that operations are being conducted as usual,” said WazirX on Twitter. “Crypto and INR withdrawals are being processed normally.”

To be sure, it is the only Indian crypto exchange right now which still allows withdrawals in INR to its users. While users on Twitter have taken stances, some pro-WazirX and some pro-Binance, there is still no clarity on what the users should be doing in this case.

In an earlier conversation with Inc42, a crypto influencer said, “The entire crypto ecosystem is shocked and it will be very tough to convince the regulatory authorities to have a softer stance towards the industry considering the public war which has played between the WazirX and Binance CEOs. And the first in the line of fire will be WazirX.”

The Issue Of Ownership

Zhao seeks to distance itself from WazirX and Zanmai Labs (the relationship between the two companies led by Shetty is still unclear) in light of the ED action last week. The reasons for both sides not having closed the deal even after almost three years are ambiguous, to say the least.

Zhao noted that Binance asked for transferring of WazirX system source code, deployment and operations multiple times, with the latest being in February this year.

According to Shetty, however, the matter is stuck on Binance not disclosing its parent company.

Shetty also shed more light on the deal that happened between the two companies in 2019. He stated that the original deal saw Binance acquire the IP of WazirX, that is, its technology. 

Zanmai Labs licenced the same later to use in India, which allowed it to partner with Binance to run WazirX in India.

The tussle between Shetty and Zhao seems far from over, with covert tweets from both the cofounders coming shortly after things calmed down on Saturday. However, this leaves the Indian crypto investors – almost 10 Mn of them if WazirX’s numbers are to go with – with questions about what will happen to their investment.