WazirX’s Comeback on Denial of Wallet Services Threatens Binance with Legal Action

The Indian exchange assured its customers that its funds are stored in multi-signature wallets that adhere to industry-leading standards.

The opaque and intriguing ownership of the Indian crypto exchange WazirX continues to baffle investors and crypto honchos alike. Over the past two weeks, Binance and WazirX top executives once again came to blows over the issue.

In August 2022, Binance CEO Changpeng Zhoa and WazirX CEO Nischal Shetty publicly accused each other of lying about the latter’s ownership.

WazirX Threatens Binance With Legal Action
In the latest, WazirX described the allegations made by Binance’s February 3 statement, which gave its estranged Indian partner just a few hours to withdraw all its funds from its wallets and accounts, as “false and unsubstantiated.”

Responding to the deadline, WazirX tweeted later that day that it was “transferring assets to multi-sig wallets,” which it expected to complete “within the next few hours.”

In a brief statement on February 7, WazirX, the Singapore-headquartered India-focused crypto exchange, said its users should not be concerned as in the aftermath of its fallout with Binance, “WazirX’s digital assets are stored in accordance with industry-leading standards.” But the announcement ended up threatening Binance with legal action.

“The allegations made by Binance in their blog are false and unsubstantiated. As far as Binance’s actions are concerned, we are taking the necessary steps to seek recourse and protect our legal rights,” the WazirX statement said.

Binance’s Deadline for Stopping Wallet Service
Giving the background to the extreme decision, the world’s largest crypto exchange accused the Indian-based platform of indulging in “misleading claims related to Binance’s alleged role in and responsibility for operating the WazirX exchange.”

“Since Zanmai has refused to clarify their misleading statements, Zanmai has till 3 February 2023 (23:59 UTC) to remove the funds from the accounts that they used for WazirX’s operations,” the statement said.

In the previous weeks, media reports revealed that the relations between the two crypto firms were going through tense moments in the past weeks, with Binance asking WazirX to retract statements by its CEO, Nischal Shetty. They claimed that the Indian exchange is owned by Binance, a claim the latter made in a 2019 blog, which has since been reportedly edited and changed.

What’s Behind the Latest Flare-Up?
The latest flare-up started sometime last month when Shetty once again asserted in its communications with Binance that WazirX’s holding company Zanmai Labs had transferred the control to the CZ-led exchange over the latter’s user assets. He added that Binance benefited from this deal as it unilaterally withdrew nearly $67 million as the fee for offering trading services to WazirX users on its platform.

This claim was fiercely countered by Binance in its February 3 statement. As per a recent third-party report of WazirX’s Proof of Reserves, 90% of the Indian exchange’s user funds were stored in Binance wallets.