Binance-WazirX spat: Opaque ownership, a hazy acquisition deal, and off-chain transactions

moneycontrol.com:

“We always thought that Binance owned WazirX. Binance even sent all of us WazirX employees Apple watches last year during their anniversary around July,” said a former WazirX employee requesting anonymity.

The employee said WazirX didn’t allot employee stock options to its staff, while other Indian exchanges offered lucrative ESOPs to new recruits.

“We raised this issue many times about ESOPs, since it’s a volatile sector. But we were always told that it’s Binance-owned, so no question of ESOPs,” the employee said.

An investigation by India’s Directorate of Enforcement (ED) into predatory and fake Chinese loan apps inadvertently opened a can of worms in the already beleaguered crypto space.

A war of words suddenly erupted over the weekend, raising questions about the ownership of WazirX, the crypto exchange with the largest trading volumes in India.

After announcing that Binance had acquired WazirX in November 2019, Binance CEO Changpeng Zhao, also known as CZ, tweeted that the world’s largest cryptocurrency exchange by trading volumes “never—at any point—owned any shares of Zanmai Labs, the entity operating WazirX.”

His series of tweets started a few hours after the ED released a statement on August 5 that said Zanmai Labs, the company owning WazirX, created a web of agreements with Crowdfire Inc., Binance (Cayman Islands), and Zettai to “obscure the ownership of the crypto exchange.”

Structure and ownership

WazirX was founded in 2018 by Nischal Shetty, Siddharth Menon and Sameer Mhatre.

Over the past one year, the crypto exchange has expanded its team size to 250 as its revenue grew to Rs 105 crore in FY21 from Rs 26 lakh a year earlier, according to the latest regulatory filings accessed via Tofler.

Shetty and Mhatre are listed