Binance has decided to end its provision of wallet and technical services to WazirX, intensifying the conflict with the Indian cryptocurrency exchange that was once a potential acquisition target for Binance. On Friday, Binance issued a warning, stating that Zanmai, the company behind WazirX, has not yet transferred assets held in Binance wallets despite being informed about the changing conditions.
According to the largest cryptocurrency exchange globally, the tension stems from Zanmai’s refusal to rectify false statements regarding its relationship with Binance. In a blog post, Binance explained that it had given Zanmai the option to retract the misleading public statements or discontinue the use of the wallet service. As Zanmai has declined to clarify the situation, Binance has set a deadline of February 3, 2023, for the transfer of funds from the accounts used for WazirX’s operations.
Changpeng Zhao, the founder and CEO of Binance, had previously stated that the company had been working towards finalizing the acquisition for several years. However, the transaction remains incomplete due to unspecified “issues.” On the other hand, WazirX and its executives maintain that Binance has acquired the company. Binance asserts that its relationship with WazirX is limited to technical services and is not unique since it has similar agreements with other companies utilizing Binance’s technology and infrastructure while operating independently. Binance argues that the false portrayal of the relationship misleads the public by suggesting that Binance has control over WazirX users’ assets, activity, and platform operations. Binance has invited Zanmai to make arrangements for the withdrawal of remaining assets after February 3rd, but the final decision lies with Zanmai’s team.
In response, a spokesperson for WazirX announced that the company has initiated the process of transferring assets to multi-sig wallets and expects it to be completed soon. The spokesperson reassured users that they can continue to trade, deposit, and withdraw funds without disruption, as their funds remain secure.
Binance emphasized that the ongoing dispute between the two companies will not affect its direct customers. WazirX, one of India’s largest cryptocurrency exchanges, processed over $10 billion in trades last year. This conflict adds to the challenges faced by WazirX, CoinSwitch, and CoinDCX, the other local exchanges in India, due to the increasingly hostile regulatory environment in the country. The tax regulations on cryptocurrency implemented in India in April 2022 have led to a loss of market share for local exchanges, with foreign exchanges like Binance and Coinbase gaining prominence. According to research conducted by the New Delhi-based think tank Esya, foreign exchanges accounted for 67.6% of India’s cryptocurrency market share as of October 2022, up from 50% in November 2021. Additionally, all Indian exchanges have experienced a decrease in trading volume on their platforms due to the new tax regulations and the ongoing market downturn.
