WazirX scrambles to move assets after Binance terminates service

Indian cryptocurrency exchange WazirX is moving assets held in the Binance wallets after an ultimatum from Binance to do so by February 3, 2023.

“We have initiated the process of transferring assets to multi-sig wallets, which we expect to be fully completed within the next few hours. Users can continue to trade, deposit & withdraw funds as usual. Your funds are safe with us,” WazirX said in a tweet late Friday.

Earlier, Binance, which operates the largest crypto exchange in the world, claimed that it has no control over WazirX user funds or any aspect of the WazirX exchange’s operations.

“Rather, as we do for many individuals and organizations, we provided wallet and related technology services to the exchange’s operator, Zanmai Labs (“Zanmai”), – a service we are terminating,” Binance said in a blog post.

The latest development comes months after the two companies were locked in a public tussle over the ownership of the Indian crypto exchange.

In August 2022, Binance CEO Changpeng Zhao disclosed that his company’s bid to acquire WazirX in 2019 never materialized. The disclosure, however, came following regulatory scrutiny and raids conducted on WazirX by the Enforcement Directorate.

Binance, in an updated blog post, clarified that the 2019 'acquisition’ “was limited to an agreement to purchase certain assets and intellectual property of WazirX. Binance did not purchase any equity (and does not own any equity) in Zanmai Labs, the entity operating WazirX and established by the original founders.”

Binance has maintained this position since then, and the latest blog post also reflects the same. WazirX, however, disagrees as its director and co-founder Nischal Shetty reportedly declined to withdraw his previous comments that Binance had indeed acquired the Indian firm.

With the global cryptocurrency space already reeling, India has maintained an arm-length distance from the cryptocurrency and has instead slapped hefty taxes.

In the case of WazirX, its trading volume nosedived 76% in the 12 months ending December. The company managed over 7X growth in its scale in the fiscal year ending March 2022, thanks to a small base and the boom during most of 2021 at least.

However, winter came early to the crypto world in FY23 and is likely to hurt the firm on the revenues and expenses fronts. Possibilities are that these numbers could fall below or even more than the growth seen in FY22 to levels well below those in FY20.