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Days after the Enforcement Directorate (ED) probed WazirX, India’s largest cryptocurrency exchange, the company said it has no connection with any users indulging in illegal activities. This comes after the ED on Friday said it had seized Rs 65 crore after finding evidence against the company in its probe into non-banking finance companies (NBFCs) and their fintech partners indulging in predatory lending practices.
“It appears that ED is investigating the transactions of certain users and Zanmai Labs (the entity operating WazirX) has no connection with such users and is unaware of the purpose of their transactions. Zanmai Labs is in the position of any other intermediary whose platform may have been abused,” WazirX said in a public statement.
According to the ED, Chinese lending companies that were closed in India diverted their funds through crypto exchanges and the maximum amount of funds were diverted to the WazirX exchange.
The company also made it clear that it is owned by Zanmai Labs and Binance. Although in a Twitter rant last week, Binance CEO Changpeng Zhao said he does not own WazirX and “only provides wallet services for WazirX as a technical solution.”
According to WazirX, it has a zero tolerance policy for any illegal activities. “Users agree in the user agreement to use WazirX in accordance with applicable laws. Users are registered on WazirX only after they complete the KYC process, including providing proof of address and identity. Our terms and conditions and KYC/AML processes are publicly available on the platform,” the crypto exchange said, adding that it “does not accept any cash transactions”.
On Monday, Binance disabled off-chain transactions, causing panic among users who wanted to transfer their funds from WazirX to Binance without paying a gas fee. WazirX believes that there seems to be a big misunderstanding about off-chain transactions. “Off-chain transactions between WazirX and Binance can only be done by a user between their own account on the two platforms. Therefore, KYC details are also available for all off-chain transfers [and have been submitted to ED on request]. Off-chain withdrawals also cannot occur unless accounts are KYCed. Law enforcement agencies (LEAs) can obtain full information about accounts involved in off-chain transfers,” the company added.
