As a seasoned researcher with years of experience delving into the intricacies of the digital economy, I find myself deeply immersed in this ongoing saga between Binance and WazirX. The latest developments have left me scratching my head more than once, as it appears that both parties are trying to pin the blame on each other while users suffer the consequences.
Binance clarifies that they have neither owned, managed, nor run WazirX at any point in time, including before, during, or after the July 2024 WazirX attack. Currently, numerous users are finding themselves in a difficult situation as their cryptocurrency assets remain frozen by WazirX following the attack.
In the filing to Singapore High Court regarding Wazirx versus Zettai Pte Ltd, Wazirx argued that Binance is responsible for reimbursing users for their crypto losses due to the hack, not Zettai. However, in a public statement, Binance dismissed these claims and denied any liability towards users following the 2000 crore hack. Binance maintains that this responsibility was assumed by the WazirX team under Zanmai/Zettai, making them the responsible party in this matter.
It’s been pointed out by Binance that the Indian company Zanmai was the one who registered the WazirX platform with the Financial Intelligence Unit (FIU) in India back in 2023, and this is also acknowledged by India’s Enforcement Directorate as the owner of WazirX.
Zettai asserted that Binance played a part in managing WazirX’s activities and mishandled customer assets during a cyber attack. However, Binance refuted these allegations, explaining that it did not purchase WazirX, had no role in the hack, and had requested the withdrawal of WazirX user funds from its digital wallets several months prior to the event.
The 2000 Crore Hack
On July 18, 2024, a cyber attack on WazirX led to an estimated $235 million worth of user funds being stolen. The attack focused on a multi-signature wallet that had five signatories from WazirX and one from Liminal, a third-party custodian. After the incident, Zettai requested a temporary halt in Singapore to shield them from potential lawsuits by creditors. Subsequently, Nischal Shetty, co-founder of WazirX, provided affidavits implicating Binance in the problems that surfaced after the hack.
Binance’s Response to WazirX Claims
In their latest announcement, Binance countered Zettai’s claims extensively, addressing several key topics thoroughly.
1. Ownership and Control:
Binance initially made it clear that they never obtained or managed WazirX. The planned acquisition fell through because Zettai failed to meet its commitments. Binance insists that Zanmai Labs Pvt Ltd, the Indian company, continues to own and manage WazirX. This ownership has been confirmed by India’s Directorate of Enforcement, and Mr. Shetty himself has publicly stated that he is still in charge of WazirX.
2. Liability for User Funds:
As an analyst, I’d like to clarify that the ongoing disagreement between Zettai and Binance does not imply that Binance is liable for WazirX users. It’s essential to understand that Binance does not own or exercise control over WazirX. Therefore, any claims or compensation pertaining to WazirX are not Binance’s responsibility. Consequently, there is no legal basis for Binance to settle Zettai’s creditors.
It appears that Binance is making it clear they are not involved with the funds of Wazirx users, and they’re showing no intention of stepping in to address this issue.
3. WazirX User Agreement:
As an analyst, I’ve examined Mr. Shetty’s claim that Binance offers cryptocurrency-related services to WazirX users, as stated in the WazirX User Agreement. However, Binance has refuted these allegations, asserting they have never provided such services. Instead, they only supplied wallet services to Zanmai, a practice common among global virtual asset service providers when collaborating with other platforms.
The mentions of Binance in the WazirX Terms of Use are illegal and misleading because Binance has never agreed to or endorsed these provisions. Despite our protests and requests for their removal, Mr. Shetty and Zanmai have chosen to disregard our demands. It’s important to clarify that Binance does not govern WazirX and cannot alter its Terms of Use. Furthermore, the ongoing disagreement with Zettai has no connection to Binance being a part of this agreement.
4. Custody of User Funds:
In simple terms, Binance offered wallet services to Zanmai much like it does for other Virtual Asset Service Providers (VASPs). However, following a notice issued by Binance in January 2023, Zanmai chose Liminal to manage WazirX user funds. It’s important to note that Binance did not play a role in this decision or the handling of these funds.
5. Responsibility for Cyberattack Consequences:
The assertion by Mr. Shetty that Binance is responsible for the cyberattack is unfounded. Before the occurrence, Binance requested that WazirX customers move their funds out of its wallets. Upon removal, these funds were sent to Liminal, a custody firm selected by Mr. Shetty and Zettai with whom Binance had no dealings. It was WazirX and Liminal who managed the compromised wallets, not Binance. Binance has asked for reports on the incident but hasn’t received any yet. An investigation led by Grant Thornton determined that the attack didn’t stem from Liminal’s systems.
6. Statements by Mr. Shetty:
Mr. Shetty and Zettai have been disseminating false claims about Binance’s relationship with WazirX. To clarify, Binance has never held ownership, control, or managed WazirX, not even during the hack that occurred in July 2024. It is essential to understand that Binance bears no responsibility for WazirX’s activities or the outcomes of the cyberattack. We strongly advise users to carefully evaluate such misleading assertions. Rest assured, Binance upholds transparency and prioritizes user safety.
To summarize, Binance denied Zettai’s claims and requested that the WazirX team take responsibility for the security breach, pay damages to the affected customers, and disassociated themselves from any responsibility related to the event.
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2024-09-17 19:49