WazirX’s crypto deposits and associated activities are currently under nobody due to a dispute between Zettai and Binance, revealed in a townhall event organised by Nischal Shetty, CEO of WazirX, after almost 45 days of the breach.
This one-way, non-interactive event was meant to clarify the position of WazirX and answer customers’ questions. Shetty elaborated on the complex ownership structure of WazirX.
The platform’s Indian Rupee (INR) deposits and associated activities are under Zanmai Labs Pvt Ltd, and the crypto deposits are still disputed.
On January 23, Binance withdrew from WazirX’s crypto ownership. To fill the gap, Zettai took partial control of the assets. However, Zettai did not assume the operational side of the crypto.
“While Zettai presently handles crypto assets of the Platform under protest. Zettai’s position is that Binance has no basis for the termination, and Binance continues to operate the Platform — Zettai did not assume the operation of crypto deposits and associated activities,” WazirX said.
So, Zettai holds the crypto but doesn’t handle the operation. Furthermore, this situation will also complicate and delay the legal process to return the crypto assets to users.
“There is an ongoing dispute between Zettai and Binance on who owns the Platform and is subject to strict confidentiality,” confirmed WazirX. “Because it is not clear who owns the Platform, it is also not clear who the contractual counterparty is for users with crypto balances on the platform.”
WazirX has already blocked 100% of users’ crypto funds while allowing limited withdrawals of INR. The townhall event was intended to allay the customers’ fears, however, it has only intensified it.
The platform also revealed its financial position which is not at all good. The best case scenario is to return anywhere between 55% and 57% of the funds, explained George Gwee, director at Kroll, a restructuring firm currently working with WazirX.
Aditya Singh, a user of WazirX, discovered that the exchange had not been transparent about its Proof of Reserves (POR), which is a method of verifying the exchange’s assets. After pressure from users, the platform released the POR, but instead of providing wallet addresses, they published the Live POR feature of Coin Gabbar.
On analysis, researchers found a mismatch between what WazirX showed and the percentage of remaining crypto. Also, the POR URL was taken down, leading to more suspicion. When asked, WazirX said that it is holding some crypto. However, the platform refused to divulge further details.
The company also announced that it is trying to talk to an unnamed white knight for capital infusion. The company executives did not answer about the legal actions they have taken against Binance and Liminal.
Furthermore, WazirX has also set aside $12 million of users’ assets for expenses, legal costs, and the restructuring process.
The platform has also decided to go forward with the Singapore Scheme of Arrangement which will be legally binding on all relevant parties.
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