An insight into the Binance and WazirX Twitter showdown

What is WazirX?

WazirX is India’s biggest crypto exchange. It was founded by Nischal Shetty in 2018, who created the crypto platform in order to grant access to individuals in India who were interested in investing in crypto but did not have the means or knowledge to do so. Prior to the inception of this exchange, the RBI had imposed a ban on any banking entities dealing or trading in cryptocurrency or engaging with the various crypto startups that were popping up across the world, as it was still a relatively new player in the financial market.

The RBI was concerned about the stability and security of various crypto coins, which were not regulated by any centralized institution (similar to how the RBI regulates the Indian rupee). Due to this, many cryptocurrency exchanges took their business elsewhere, leaving Indians with no way to explore the world of cryptocurrency, which was seen as a revolutionary new step in the world of digital finance.

In response to RBI’s ban on cryptocurrency, Nischal Shetty began a campaign on Twitter under the hashtag #IndiaWantsCrypto with the intention of harnessing the voice of all Indian crypto enthusiasts and overturning the RBI’s initial decision, opening India up to the new world of cryptocurrency.

The campaign was a success, and with the support of almost 10 million people all over the country, Shetty was able to educate many on the working and benefits of cryptocurrency, convince politicians and other government officials to hop on the cryptocurrency wagon, involve news channels and newspapers to pick up the story and more. The campaign ran for over a year, and after almost 500 days of campaigning, the Supreme Court overturned the RBI’s decision and lifted the banking ban on cryptocurrency. The crypto exchange played a huge role in the campaign, providing potential investors with a secure peer-to-peer platform through which they could buy and sell cryptocurrency while being under the bounds of the law.

However, Shetty is still running the #IndiaWantsCrypto campaign in order to increase the number of regulations that would make trading in crypto a safe and easy option for citizens in every corner of the country and push the boundaries of how Indians can utilize cryptocurrency for their own gains.

WazirX and the Binance ‘acquisition’

In 2019, the world’s leading cryptocurrency exchange, Binance, announced that it had taken over WazirX and would be working with them to cater to the Indian crypto market. Under this new ownership, WazirX users would be able to buy and sell crypto directly using Indian rupees and invest in a wider range of crypto coins through the Binance platform, including stablecoins like Tether (USDT).

Binance founder Changpeng Zhao expressed an interest in helping the Indian cryptocurrency market reach its maximum potential and turn India into a global blockchain innovation center, as well as providing the same support to other developing countries.

Recent allegations on WazirX and the ensuing chaos

However, disaster struck after the law enforcement agency, the Enforcement Directorate, recently accused WazirX of conducting money laundering through instant loan applications, after which it froze all of the exchange platforms’ assets.

Following the allegations, Binance CEO Zhang posted a series of tweets on his Twitter account stating that Binance does not, in fact, own WazirX as previously stated, but rather only assists them by providing them wallet services. He further stated that WazirX and its parent company, Zanmai Labs oversee all operations in India, including KYC, withdrawals, and cryptocurrency trading, without any involvement from Binance in an attempt to detach itself from the disgraced company.

This prompted Nischal Shetty to fire back, stating that Binance does indeed own WazirX after the 2019 negotiations and that  Zhao was simply trying to save face by distancing himself from the Indian platform. However, the documents tell other stories.

WazirX’s side of the Story

Shetty went on to state that the exchange platform does not operate under Zanmai Labs, which is a separate entity entirely, and that Binance odes hold the rights and domain name to WazirX.

Zanmai Labs is unable to deal in crypto-to-crypto transactions (it is only able to help users with INR to crypto and vice versa), which are only possible through the Binance platform; hence users are only able to make crypto-to-crypto transactions under Binance’s ownership. He also said that despite Binance’s claims of being independent, it retains profits made from WazirX as well as all assets stored on the platform, which would refute Binance’s claims of being separate from WazirX.

Binance’s side of the story

According to Zhao, the deal made in 2019 did not entail complete ownership over WazirX but simply bought them the rights to select intellectual property and assets held by the platform. He also shared that major operations were still under the control of the WazirX team, and Binance was not given access to these details. WazirX also retained all user data, and it was never handed over to Binance. However, the truth behind these statements is still uncertain as well, as Shetty continues to stress the fact that Binance did, in fact, have access to all of WazirX’s servers.

Who Owns Wazirx?

According to the filings available with the Ministry of Company Affairs, Zanmai Labs is a company that is in the business of operating a cryptocurrency exchange platform, as a limited risk distributor with respect to the facilitation of non-P2P INR to INR trading pairs on the WazirX platform in India. The company offers cryptocurrencies such as Bitcoin, Ethereum, USDT, WRX Coin, Tron, Matic, Dogecoin, SHIB, Solana, and Cardano.

There are two Shareholders of this company as per the last filed annual reports with the Ministry of Company Affairs. Nishchal Shetty and Zettai Pte Ltd, a company based in Singapore hold 99% of the shares of Zanmai Labs.

Who owns Zettai?

Zettai Pte. Ltd, (registration no. 201900774K) having a registered office of the company 20, Bendemeer Road #03-12 BS Bendemeer Centre, Singapore (339914) is the 99% shareholder of the Zanmai which operates Wazirx.

Further, in the Singapore-based Zettai Pte Ltd (WazirX), the company has 3 shareholders Nischal Shetty holds 74.27%, Sameer Hanuman Mhatre holds 18.56% and Siddharth Menon holds a 7.17% stake.
Thus, there is zero legal documentation available with the Ministry of Company Affairs which proves that there was any holding of Binance in the Zanmai Labs or in Zettai Pte Ltd. Hence the claims made by Binance seem correct in this case.

Who audits Zanmai?

KISAN &CO. is the auditor of the company since its inception. The audit firm is registered at ROOM NO 3, OM BHAGYASHRI CHS, HANS NAGAR, KHOPAT, THANE(W)-400601, and the proprietor of this firm is Kisan Mahesh Pandya.

Other Companies of Directors

There are at least five more companies associated with the Nishchal Shetty and Sameer Mhatre directors of Zanmai. The list of all these companies is as follows.

• Codigami Technologies is one of the oldest companies of Sameer Mhatre and Nischal Shetty.  This company is found to be associated with Crowdfire, INC.
• Qizil 21 is the company engaged in managing the workforce and the employees of the exchange were issued the payslips from this company according to the report published on moneycontrol.

What is the Turnover of Zanmai?

According to the financial statements filed for the year ended 2021, Zanmai Labs posted revenues of Rs. 105.76 crores. Zanmai Labs posted revenues of Rs. 19 and 26 lacs in the years 2019 and 2020 and then there was a huge jump in revenues in the year 2021. Zanmai revenues in 2021 were up by more than 40000% in a year. The Financials of Zanmai also reveal the related party transaction of Rs. 64 crores. This amount is equivalent to the amount frozen by ED.

Conclusion

As the battle between Binance and WazirX wages on, users of the Indian crypto trading platform fear for their uncertain future with the company; the two founders continue to hurl allegation upon allegation at each other in the form of sharply worded tweets, leaving the public divided upon which one is telling the truth.

Furthermore, Zhao has threatened to shut down WazirX entirely due to these allegations; however, Shetty challenged these claims saying he wouldn’t dare to hurt the millions of users who depend upon the app for their crypto transactions.

It remains yet to be seen how this Twitter battle plays out and which company emerges as WazirX’s true owner in the end. Are the allegations truly baseless? Will the feud affect the assets of WazirX users? Or is this just a carefully thought-out marketing ploy to garner interest? It seems we will have to wait and see for the answers to these questions.