After a verbal spat on who owns the Indian Crypto Exchange WazirX, the company finds itself in still more trouble.
Binance has requested (1) that the WazirX Exchange remove whatever cash it holds in its wallet after announcing the suspension of its wallet services for the WazirX Exchange.
In August 2022, Nischal Shetty, also a co-founder of WazirX, and Changpeng Zhao, also a co-founder of the exchange, engaged in a violent verbal confrontation over the ownership of the company. Shetty announced the acquisition of WazirX by Binance to the public through a tweet.
In his argument, Changpeng Zhao stated that his company never actually finished the transaction to buy WazirX. Investors were left unclear about the control of the Indian crypto currency exchange as a result of the issue.
However, the situation took a new turn today when Binance announced that it would discontinue its wallet services to Zanmai Labs, the firm that is the parent organization of WazirX.
Relationships Severed With Zanmai Labs
Binance asserts that Zanmai Labs has made misleading assertions regarding the company's activities being controlled by the former. On January 26, they requested that Zanmai Labs recant the false representations or face the possibility of losing the wallet services provided by Binance.
However, the parties could not agree, so Binance chose to terminate its provision of wallet services to WazirX.
Binance gave Zanmai Labs a deadline to withdraw all its remaining assets by February 3.
"On January 26th, 2023, we presented Zanmai with a choice: It could either retract the fraudulent public remarks (and continue to use our service) or stop using our wallet service. Zanmai has until February 3rd, 2023, at 23:59 UTC, to withdraw the monies from the wallets they utilized for WazirX's activities. This is because Zanmai has failed to provide any clarification regarding their deceptive assertions."
However, the Indian exchange has not yet completed this task. It has a net holding of USDT 246.31 million, as indicated by the WazirX Proof of Reserves (PoR). The Proof of Reserves report that was issued on January 11 shows that 90 percent of customers' cash is kept in wallets provided by Binance.
"Ninety percent of a user's assets are kept in wallets at Binance, with the remaining ten percent split between "hot" and "warm" wallets. Binance protects user funds by safeguarding its platform with stringent procedures and technically advanced techniques at the forefront of the industry.
They are consistently devoted to servicing their consumers in various capacities, including real-time monitoring, a risk management system with a 360-degree perspective, enhanced data privacy technologies, and end-user security education." (2)
WazirX Users are worried about the safety of their cash because a substantial percentage of it is held on Binance. Users of crypto currency in India already face difficulties in the form of a high Tax Deduction at Source (TDS) and a flat tax rate of 30% on crypto currency earnings.
Recent pronouncements suggest that those who fail to pay their tax withholdings might face a possible tenure of up to six months in jail.
