Binance will cease offering its wallet and technical services to WazirX, escalating the conflict with the Indian cryptocurrency exchange that it once aimed to acquire. Binance warned on Friday that Zanmai, the company behind the WazirX exchange, has not yet transferred assets stored in Binance wallets despite being informed of the changing conditions.
The tension has arisen due to Zanmai’s refusal to correct false statements about its relationship with Binance, according to the world’s largest cryptocurrency exchange. Binance stated in a blog post that it offered Zanmai the choice to retract the false public statements or terminate the use of the wallet service, but since Zanmai has declined to clarify, Zanmai has until February 3, 2023, to transfer the funds from the accounts used for WazirX’s operations.
Changpeng Zhao, the founder and CEO of Binance, stated previously that the company had been making efforts to finalize the deal for several years, but the transaction remains unfinished due to “some issues” which he declined to specify. WazirX and its executives assert that Binance has acquired the company. Binance maintains that its relationship with WazirX is limited to technical services and is not exceptional, as it has similar agreements with multiple other companies that utilize Binance’s technology and infrastructure, but operate their businesses independently. Binance stated that the false representation of the relationship put forward to the public misleads Binance as having control over WazirX’s users’ assets, activity, and platform operations. Binance has invited Zanmai to make arrangements for the withdrawal of remaining assets after February 3rd, but the outcome ultimately lies with Zanmai’s team. In response, a WazirX spokesperson announced that the firm has begun the process of transferring assets to multi-sig wallets and expects the process to be completed in the coming hours. The spokesperson reassured users that they can continue to trade, deposit, and withdraw funds as normal and that their funds are secure.
Binance emphasized that the ongoing dispute between the two companies will not impact its direct customers. WazirX, one of India’s largest cryptocurrency exchanges, processed over $10 billion in trades last year. This dispute is only one of the challenges the company faces, along with other local exchanges CoinSwitch and CoinDCX, due to the country’s increasingly hostile regulatory environment. India’s tax regulations on cryptocurrency, which took effect in April 2022, have caused local exchanges to lose market share to foreign exchanges such as Binance and Coinbase.
In fact, as of October 2022, foreign exchanges accounted for 67.6% of India’s cryptocurrency market share, an increase from 50% in November 2021, according to research by New Delhi-based think tank Esya. All Indian exchanges have also seen a decrease in trading volume on their platforms as a result of the new tax regulations and ongoing market downturn.
