As Changpeng Zhao, co-founder of Binance and Nischal Shetty, co-founder of 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 the feud. As of August, there were 15 million registered users of WazirX.
Off-chain transfers to WazirX - a popular feature on the exchange - were discontinued and the WRX token native to exchange plummeted over 14 per cent.
Transactions that occur on a network that move the value outside of the blockchain are off-chain transactions. These transactions are becoming popular among large participants due to their zero or low cost.
These transactions are often not subject to a transaction fee and are popular among investors on the exchange. These have been on the Enforcement Directorate's ED radar.
Despite being offered multiple opportunities, WazirX didn't reveal the KYC of the suspect APP companies, and failed to reveal the KYC of the wallets, according to a statement released by the ED on Friday. Most of the transactions are not recorded on the blockchain. The ED had said 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.
The value of the WRX token, native to the exchange, also fell after the raid, as the two coin exchange co-founders erupted on Friday on Twitter.
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 price of the criptocurrency fell 14.52 per cent over the period.
Amish Prajapati, a WazirX user from Mumbai, told Business Today he had invested a lot of money in the WRX token and is now sitting on huge losses.
The value of WRX has fallen since the beginning of the year, according to Prajapati. There was a panic among investors 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. Zhao said it was as simple as that.
The WazirX telegram group began to get flooded with questions from investors and users as a result of the confusion. Other Indian telegram groups saw a similar fate.
A user on telegram asked, Shall I sell all my WRX holdings or continue to hold them? This is not the first time that the WRX token has been mentioned in the news, and that is for not the right reasons.
In January of this year, WazirX fell into trouble with the GST department because the exchange didn't pay the applicable 18 per cent GST on transactions taking place on the exchange. WazirX had to pay Rs 49.2 crore for the tax department.
Despite the unease of investors, WazirX claims that all investor funds are safe and all operations are carried out as usual.
The exchange said in a statement that deposits and withdrawals are working as usual, despite the recent fiasco. We will always act in the best interest of users when we evaluate our plan of action.