Binance to Stop Off-Chain Transfers with WazirX After Probe

Binance said it is halting off-chain fund transfers with WazirX after Indian regulators recently opened an investigation into the crypto exchange based on money laundering allegations. Binance said the move comes after some of its users thought funds deposited in WazirX were managed by Binance itself, which is “not the case,” said the world’s largest cryptocurrency exchange.

Binance Will Comply with Indian Regulators in WazirX Probe

Binance said it is terminating off-chain fund transfers between itself and WazirX following the Indian regulator’s probe into the local crypto exchange, according to the official announcement. The decision comes after Binance learned that some of its users believe that the U.S. exchange manages funds that were deposited in WazirX.

“As a result of the recent regulatory action taken against Zanmai Labs Pvt Ltd, in relation to their operations of the WazirX Exchange, it has come to our attention that some users were given to believe that funds deposited in WazirX were managed by Binance. This is not the case.”

Change in Fund Transfer Process Between Crypto Exchanges Binance & WazirX

Accordingly, Binance will stop supporting off-chain fund transfers with WazirX as of Thursday at 03:00 UTC. On the other hand, “users will still be able to deposit and withdraw balances via the standard withdrawal and deposit process between Binance and WazirX,” the company said.

Binance, which is also being investigated by the SEC over an ICO, also said it will support Indian watchdogs regarding their investigation into WazirX, operated by Zanmai Labs. To this end, the top crypto exchange said it plans to keep an open dialogue with regulators and lawmakers in an effort to “establish a global regulatory framework for the industry.”

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CZ Denies That Binance Owns WazirX

Binance’s latest action comes shortly after its CEO Changpeng Zhao (CZ) denied allegations that Binance owns the troubled WazirX. CZ’s stated this following India’s Enforcement Directorate’s (ED) probe into WazirX over alleged money laundering on instant loan apps.

CZ said in a tweet that Binance doesn’t own any stake in Zanmai Labs, adding the deal for purchasing WazirX was never completed. He said Binance just provides wallet services for WazirX, in addition to an integration using off-chain transactions.

ED said last week it has frozen $8.1 million worth of WazirX’s digital assets, just days after India’s Ministry of Finance investigated two cases of WazirX’s possible breach of foreign exchange regulations. ED also claimed WazirX has misrepresented the ownership of the crypto platform through a “web of agreements and failed to provide data about crypto transactions of the suspicious fintech APP companies.

Do you think Binance was right to cut off-chain transfers with WazirX? Let us know in the comments.