Crypto exchange giant Binance reiterated its claim that it does not own, control or operate WazirX in any way and accused a director of its parent company of making “misleading statements” to the contrary on Tuesday.
WazirX suffered an exploit resulting in the unauthorized transfer of over $230 million worth of crypto assets on July 18. The exploit targeted the exchange’s multisig wallet on the Ethereum network, potentially resulting from a private key compromise, and drained the funds.
In August, Zettai, the Singapore holding company behind WazirX, filed an application with the country's High Court for a moratorium to restructure its liabilities following the exploit. Zettai estimated it needed at least four to six months to consider the terms of a restructuring plan and work with the relevant stakeholders, claiming it was the “fastest route to allowing the reopening of cryptocurrency withdrawals.”
An automatic moratorium of 30 days commenced following the application by Zettai Director Nischal Shetty, and the High Court has scheduled a hearing for Sept. 25 to decide whether or not to extend it.
Zettai also noted its ongoing dispute with Binance in the application but said it was subject to confidentiality obligations, adding that it planned to concurrently facilitate a solution for users as quickly and effectively as possible.
Binance’s accusations
In a Tuesday blog post, Binance alleged that the WazirX team and Nischal Shetty continue to mislead WazirX customers and the market regarding the relationship between WazirX and Binance.
Binance said that India’s Enforcement Directorate recognized the Indian company Zanmai as the owner of WazirX. Zanmai was originally responsible for the operations of WazirX in India, but it is now wholly owned by Zettai, according to the WazirX parent firm.
Following Zettai’s High Court filing, Binance said that Shetty subsequently submitted two affidavits in support of the application, alleging they contained several inaccurate statements about the dispute between the two firms.
“Mr. Shetty’s allegations make it clear that he is trying to deflect the blame and claim that Binance may somehow be responsible for the losses suffered by WazirX users and creditors as a result of the cyber-attack. This is false, and any suggestion of the sort is outrageously misleading,” it said.
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Binance stated that it had never acquired, operated or controlled the WazirX platform and is not responsible for the consequences of the hack, despite alleging that Shetty asserts otherwise. While a contract was signed between the parties, the transaction was never closed due to “Zettai’s failure to perform its obligations,” it said.
Regarding the attack, the crypto exchange stated that the multisig wallet had five signatories from the WazirX team and one from third-party custody solutions provider Liminal. Binance was not involved in the operations of the compromised wallet in any way, it said.
Binance also pointed to an investigation by auditor Grant Thornton last week that suggested the exploit “likely originated outside of Liminal’s infrastructure.”
Furthermore, Binance claims Shetty suggested the outcome of their dispute may result in a determination that Binance owns WazirX and that this would result in the creditors of Zettai becoming creditors of Binance. “This is wrong,” Binance said. “Who owns or controls WazirX is not an issue that will be resolved in the ongoing dispute.”
Binance also alleges Shetty asserts that Zanmai only operates Indian rupee-related services on WazirX and Binance manages cryptocurrency-related services under the WazirX user agreement. Binance said it has never provided cryptocurrency-related services to WazirX users as described in the agreement and previously only provided Zanmai with wallet services as a tech solution for the exchange — something it does for many third parties.
In January 2023, Binance required Zanmai to withdraw funds from its Binance crypto wallets, which WazirX subsequently did.
“Mr. Shetty suggests that Binance is somehow responsible for the consequences of the cyberattack, because Binance requested that the WazirX user funds be removed from Binance wallets. This is incorrect,” Binance said, adding that it gave fair notice that funds should be removed from its wallets long before the attack occurred.
“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,” Binance concluded.
The Block reached out to WazirX for comment.
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