Users of WazirX bore the brunt of this fight as co-founders Nischal Shetty and Changpeng Zhao of the troubled cryptocurrency exchange Binance continued to argue on Twitter over the weekend over the latter's acquisition by the former. As of August, 15 million people had signed up for WazirX.
The popular function of the exchange, off-chain transfers to WazirX, was removed, and the price of the WRX token that is native to the exchange fell by nearly 14%.
Off-chain transactions are ones that take place on a cryptocurrency network and shift value away from the blockchain. These transactions are becoming more common because of their zero or cheap costs, especially among big players.
These deals were well-liked by the investors on the exchange and frequently do not incur a transaction charge. It's interesting to see that the Enforcement Directorate (ED) has been monitoring these.
The ED said in a statement on Friday that "after being given several chances, WazirX failed to provide the cryptocurrency transactions of the questionable fintech APP businesses and divulge the KYC of the wallets. The majority of transactions are also not stored on the blockchain.
After conducting searches on the exchange in connection with a case of cryptocurrency money laundering, the ED said on Friday that bank assets worth Rs 64.67 crore owned by the WazirX Director had been frozen.
Following the raid, the WRX token's value plummeted along with it as the two co-founders of the cryptocurrency exchange engaged in a Twitter debate.
Data based on CoinMarketCap Amish Prajapati, a Mumbai-based WazirX user, revealed to Business Today that he had made sizeable investments in the WRX tokens but is now sitting on hefty losses.
The value of WRX has decreased since the start of the year, according to Prajapati. The news of the 30% tax came first, followed by the Luna collapse, and now this. I'm at a complete lost.
Additionally, after Zhao tweeted, "We might shut down WazirX," investors began to worry. He then encouraged WazirX customers to transfer money to Binance in another tweet. "Transfer your WazirX money to Binance if you have any. That's it," Zhao cautioned.
But this is not the first time the WRX token has made headlines, and not always for the right reasons.
WazirX came into difficulty with the GST department in January of this year because the regulatory body claimed the exchange had failed to pay the appropriate 18% GST on transactions made on the exchange using these tokens. Later, WazirX was had to pay the tax authority Rs 49.2 crore.
WazirX asserts that all investor monies are secure and that business as normal is being conducted in spite of the investors' concerns.
The exchange issued the following statement in response to the latest incident: "We would like to note that now deposits and withdrawals are operating as usual."