Binance clarifies it never controlled WazirX, urges exchange to compensate hacked users

Binance has denied any relationship with Indian exchange WazirX, noting that it never owned or controlled the crypto platform, which recently lost over $230 million to a hack. In a statement published on its website today, Binance denounced WazirX co-founder Nischal Shetty’s claims about the Indian exchange’s affiliation with Binance.

Shetty had said in an affidavit that Binance bought and controlled WazirX, insinuating that Binance might be responsible for compensating users who lost their funds in the recent hack. However, Binance described the claims as misleading and called on the WazirX team to be accountable to their users.

Binance said:

“We urge the WazirX team under Zanmai/Zettai to be accountable to WazirX users and compensate them for the funds that have been lost under Zanmai/Zettai management.”

The exchange also described Shetty’s recent comments as a mere attempt to shift responsibility and deflect from the main issues, noting that users should not let this distract them from requesting the funds lost under WazirX management.

Binance denies ever owning or controlling WazirX

The Binance statement explained WazirX’s ownership structure, noting that Zanmai Pvt Ltd. fully owns the Indian exchange, and the Indian Directorate of Enforcement recognizes this. Zettai Pte owns Zanmai, and Shetty has stakes in both companies. Although Binance admitted that it had signed a contract to buy WazirX before, it claimed that the acquisition never happened because Zettai did not fulfill its obligations under the agreement.

The exchange also discredited claims that a resolution of the current dispute between Binance and WazirX management could transfer ownership to Binance, noting that this will never happen.

It said:

“Who owns or controls WazirX is not an issue that will be resolved in the ongoing dispute. As we have repeatedly made clear previously, Binance does not own or control WazirX. Zettai and its affiliates accept that they still operate WazirX. In the dispute, Zettai and its affiliates are not seeking a declaration that Binance is the owner, controller, or operator of WazirX.”

Meanwhile, Binance said that WazirX misled its users by telling them in its user agreement that Binance controls the cryptocurrency aspect of its business. In the statement, Binance emphatically stated it is not a party to the WazirX user’s agreement and does not hold the WazirX user’s funds as Binance stopped custody of funds for the exchange in January 2023. It added that the only prior relationship with the exchange is the provision of wallet services to Zanmai, which is not a unique offering as it offers services similar to those of other exchanges.

With Binance distancing itself from WazirX, it also noted that it is not responsible in any way for the attack on the WazirX platform and the loss of funds, stating that it was not involved in any arrangement that WazirX made with other service providers to store its crypto assets after moving it from Binance wallets.

WazirX users will not get a full refund

Meanwhile, the fate of users with cryptocurrencies on WazirX remains uncertain as the exchange’s current proposal shows that users will get barely half of the assets back. According to the exchange’s town hall meeting, users will only recover about 57% of their crypto portfolio.

However, many users are not happy with the proposal, which they claim forces them to bear the full consequences of the hack without the exchange and its shareholders paying any compensation. In response to the claim that WazirX is not spending any of its profits to compensate users, Shetty said WazirX was sold in 2019, and Zettai does not have any of its profits.

Still, any restructuring proposal would require the approval of a majority of creditors to pass, with at least 50% of voting creditors and 75% of the total value of funds voting in support. Whether the proposal will get this support remains uncertain.