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15 million crypto users left in limbo as Binance-WazirX feud continues

15 million crypto users left in limbo as Binance-WazirX feud continues

Following the ED's raid on WazirX, as the spat between the two crypto exchange co-founders erupted on Friday on Twitter, the value of the WRX token, native to the WazirX exchange, also tanked.

As Changpeng Zhao, co-founder of Binance, and Nischal Shetty, co-founder of the beleaguered crypto exchange WazirX, kept bickering with each other over Twitter over the weekend about the former's acquisition of the latter, WazirX users felt the brunt of this feud. WazirX has 15 million registered users as of August.

Off-chain transfers to WazirX -- which is a popular feature on the exchange -- was discontinued and the WRX token native to exchange plummeted over 14 per cent.

Off-chain transactions are those transactions occurring on a crypto network which move the value outside of the blockchain. Due to their zero or low cost, these transactions are becoming popular, especially among large participants.

These transactions often do not attract a transaction fee and were popular among the investors on the exchange. Interestingly, these have been on the Enforcement Directorate's (ED) radar.

As per a statement released by the ED on Friday, “Despite giving repeated opportunities, WazirX failed to give the crypto transactions of the suspect fintech APP companies and reveal the KYC of the wallets. Most of the transactions are not recorded on the blockchain also.”

The ED had announced on Friday that bank assets worth Rs 64.67 crore held by WazirX Director had been frozen after the investigative body conducted searches on the exchange in connection with a case of money laundering via cryptocurrencies.

Following the raid, as the spat between the two crypto exchange co-founders erupted on Friday on Twitter, the value of the WRX token, native to the exchange, also tanked.

According to CoinMarketCap, WRX was trading at $0.2816 at around 4:00 PM IST on Friday and fell to $0.2407 at 11:00 AM IST on Monday. The cryptocurrency fell 14.52 per cent over the period.

Data as per CoinMarketCap

Amish Prajapati, a WazirX user from Mumbai, told Business Today that he had invested a significant amount in the WRX tokens and is now sitting on huge losses.

Prajapati said, “The value of WRX has been falling since the beginning of the year. First it was the 30 per cent tax announcement, then the Luna crash, and now this. I am in a huge loss.”

Furthermore, panic among investors set in after Zhao tweeted: “We could shut down WazirX.” In a subsequent tweet he advised WazirX users to move funds to Binance. “If you have funds on WazirX, you should transfer it to Binance. Simple as that,” Zhao warned.

 

As confusion grew, the WazirX telegram group began to get flooded with queries from investors and users. Other Indian crypto telegram groups too saw a similar fate.

A user on telegram asked, “Shall I sell all my WRX holdings or continue to hold them?"

 

This, however, is not the first time that the WRX token as been in the news, and that too for not the right reasons.

In January this year, WazirX fell into trouble with the GST department because the regulatory body contended that the exchange did not pay the applicable 18 per cent GST on transactions taking place on the exchange via these tokens. WazirX later had to pay the tax department Rs 49.2 crore.

Despite the unease of the investors, WazirX claims that all investor funds are safe and all operations are being carried out as usual.

In a statement, commenting on the recent fiasco, the exchange said: “We would like to state that currently deposits and withdrawals are working as usual. We are evaluating our further plan of action and will always act in the best interest of users.”

Also Read: Binance could shutdown WazirX, move your funds: Changpeng Zhao - BusinessToday
Also Read: Binance denies owning equity in WazirX as exchange faces trouble with ED - BusinessToday
Also Read: WazirX was acquired by Binance: Nischal Shetty - BusinessToday

Published on: Aug 08, 2022, 1:11 PM IST
Posted by: aakanksha chaturvedi, Aug 08, 2022, 12:57 PM IST