Binance Denies WazirX’s Blame Over $235M Loss, Urges User Compensation

Highlights:

• Binance denies any ownership or control over WazirX, asserting it is not responsible for the $235 million user funds lost.
• Binance urges WazirX to compensate users affected by the hack, accusing WazirX of deflecting blame and misleading customers.
• WazirX’s restructuring efforts and legal claims fail to absolve it from responsibility for the cyber-attack and lost funds.

Binance has firmly denied any involvement in the recent $235 million hack of Indian cryptocurrency exchange WazirX. The global cryptocurrency exchange emphasized that WazirX must compensate affected users, rejecting attempts to shift blame onto Binance. Moreover, Binance asserted that the security and protection of user assets are fundamental duties of any cryptocurrency platform.

Binance said that the WazirX platform operated by Zanmai was attacked, resulting in a loss of $235m, and has been unable to meet customer withdrawal requests. Rumors that Binance is responsible for WazirX creditors are false because the proposed transaction was not completed.…

— Wu Blockchain (@WuBlockchain) September 17, 2024

In a detailed statement, Binance clarified that it has never owned, controlled, or operated WazirX at any point, including before, during, or after the cyber-attack. The company stressed that WazirX’s management, under Zanmai Labs Pvt Ltd and Zettai Pte Ltd, is solely accountable for the security breach.

Binance stated:

“Their attempts to shift responsibility is a disappointing deflection tactic. WazirX must be held accountable for user funds lost under their management.”

Binance Denies Ownership and Control of WazirX

Furthermore, Binance refuted claims by WazirX’s CEO, Nischal Shetty, that Binance had acquired and controlled WazirX. The exchange explained that while a contract was signed, the proposed acquisition did not close due to Zanmai’s failure to meet obligations. Consequently, Binance never took ownership or operational control of WazirX.

The statement read, “Binance has never owned, controlled, or operated WazirX. Zanmai Labs Pvt Ltd is the legal entity that registered the WazirX platform with the Indian FIU.” Additionally, the Indian Directorate of Enforcement recognizes Zanmai as the owner of WazirX. Binance emphasized that any dispute between Zanmai and Binance does not alter the fact that WazirX is responsible for its own operations and user funds.

Compromised Wallets and User Funds

The cyber-attack on July 18 targeted a multi-signature wallet holding WazirX user funds. The wallet had five signatories from WazirX and one from Liminal, a third-party custody provider engaged by WazirX. However, Binance highlighted that it was not involved with the compromised wallet in any capacity. “Binance was not involved in the operations of the compromised wallet in any way,” the company stated.

In January 2023, Binance requested WazirX to withdraw user funds from Binance-hosted wallets. WazirX complied, transferring assets to custody solutions chosen independently. The selection of Liminal as the new custodian was solely WazirX’s decision. Binance was neither consulted nor informed about this arrangement.

Calls for Transparency and User Compensation

Moreover, Binance has requested detailed reports on the cyber-attack from WazirX, including internal investigations and assessments by security firms. These requests have gone unanswered, raising concerns about transparency. According to Binance, Liminal reported that an investigation by Grant Thornton affirmed the security of Liminal’s infrastructure, suggesting the attack originated outside their systems.

Meanwhile, WazirX has applied for restructuring in Singapore, seeking a moratorium to prevent creditors from taking collective action. On August 27, 2024, Zettai Pte Ltd made an application to the Singapore High Court. Legal experts indicate that users may recover only up to 57% of their crypto portfolios. During a community town hall meeting, WazirX’s legal team acknowledged that the platform would not be able to meet all withdrawal requests.

Binance urged the user community to evaluate WazirX’s statements critically. “We trust users to come to their own conclusions in light of these facts,” Binance stated, reaffirming its commitment to transparency and user protection. The company stressed that misleading narratives should not distract from the need for WazirX to be held accountable.