comscore WazirX reacts to ED probe, denies affiliation with users under investigation

WazirX reacts to ED probe, denies affiliation with users under investigation

WazirX, which is facing the ED probe, is a crypto exchange platform co-operated by India-headquartered Zanmai Labs and Cayman Islands-based Binance.


WazirX is facing a probe by India’s Enforcement Directorate over a money-laundering case involving an amount to the tune of Rs 2,790 crore. Last week, ED said it had frozen the bank assets of WazirX worth Rs 64.67 crore and it ended up turning its relationship with Binance sour. While the verbal spat between WazirX and Binance is still going, Zanmai Labs has reacted to the probe. The India-headquartered company said it has no affiliation with users that ED is investigating and is unaware of the purpose of their transactions. Also Read - WazirX to stop support for off-chain fund transfers with Binance: Details here

“For every transaction, we are able to produce the KYC details of the relevant user. We do not accept any cash transactions. We have fully cooperated with the Enforcement Directorate (ED) for several days and have responded to all their queries fully and transparently,” said Zanmai Labs in a statement. The company, which owns WazirX in partnership with Cayman Islands-based Binance, is basically stating that it has no knowledge of any accounts that could have been involved in money laundering. Also Read - World's richest crypto billionaire takes legal action against Bloomberg for defamation

Zanmai Labs said that each WazirX user agrees to the User Agreement before they are able to access its crypto platform. That also requires KYC (Know Your Customer) compliance from the user. In other words, WazirX will not let you trade on its platform unless you provide your KYC documents. Therefore, ideally, WazirX should have KYC information on accounts under investigation. Also Read - India gets its first crypto index, IC15: Bitcoin, Ethereum, Binance Coin take top positions

However, the allegation is that the money laundering was possible because suspected users made off-chain transactions from WazirX to Binance and that this process does not need KYC compliance.

WazirX’s off-chain transactions

Zanmai Labs addressed this “misunderstanding” about off-chain transactions between WazirX and Binance. Ever since the probe began, speculation is that WazirX does not require KYC compliance for off-chain exchanges to Binance. Zanmai Labs has denied it. “Off-chain transactions between WazirX and Binance can only be done by a user between his/her/its own account on the two platforms. Hence KYC details are available for all off-chain transfers as well,” Zanmai said. The details, it said, have also been handed over to the ED. The company said that off-chain withdrawals also cannot happen without proper KYC compliance.

“Zanmai Labs has always cooperated completely with LEAs (Law Enforcement Agencies) and provided full and complete information and shall continue to do so,” the company said.

  • Published Date: August 10, 2022 1:22 PM IST
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