The public squabble with Binance and WazirX over ownership of WazirX has resulted in a decline in trading volumes on the exchange.
WazirX’s sales dropped 50% to just $3 million on August 11, compared to $6.8 Mn on August 4.
Based on the views of Dileep Singberg the founder and CEO of the cryptocurrency fintech company MuffinPay these incidents will certainly affect investor sentiment
If the regulatory scrutiny wasn’t enough, the public dispute among Binance as well as WazirX over ownership of the latter caused the whole Indian cryptocurrency under scrutiny and slowed investor confidence.
The issue has resulted in an abrupt drop in the trade volume on WazirX and many industry experts believe it is likely to impact other exchanges in the short term because of cryptocurrency investors’ loss of confidence.
According to crypto-asset-related data company Nomics the volume of WazirX dropped more than 50% to just $3 million on August 11, down from $6.8 Mn on August 4.
Action and Ownership of ED Tussle
On the 5th of August On August 5, The Enforcement Directorate (ED) said they raided the WazirX offices WazirX and blocked its assets in the amount of INR 64.67 Cr, on the basis of money laundering. After the ED’s action, the fight started with WazirX and Binance regarding the ownership of WazirX’s Indian exchange.
Binance was the first to announce its purchase of WazirXin 2019 It was believed the former was the owner of that Indian exchange. However, the day that the ED made its announcement about its actions in the case of WazirX, Binance CEO Changpang Zhao claimed that the deal was not completed and Binance does not hold any stake within Zanmai Labs, the apparent parent company of WazirX.
In response to Zhao’s tweets WazirX CEO Shetty stated that Binance is the owner of the Indian cryptocurrency exchange’s domain as well as the access to AWS servers cryptocurrency assets, and crypto profits. The whole saga sparked an argument over the credibility of cryptocurrency.
The debate has raised questions about WazirX’s future. WazirX previously hailed as India’s biggest crypto exchange. Although the exchange claims it is operating just as normal, the latest developments may cause the the suspension of services offered by WazirX..
Additionally that, in addition, the ED is also reportedly investigating at the least 10 crypto exchanges in search of suspected money laundering. The day before, (August 12) the agency frozen INR 370 crores worth of assets belonging to a Bengaluru-based shell corporation that is linked with the crypto exchange Vauld’s India entity Flipvolt Technologies. It was also claimed that Flipvolt assisted the company to laundering proceeds from criminal activity.
Recent developments have harmed the Investors’ Faith
According to Dileep S. Seinberg, the CEO and founder of MuffinPay, a crypto-based fintech platform MuffinPay events such as the squabble among WazirX and Binance affect the feelings of investors who have placed their money into an exchange that has an enormous amount of faith.
“If the trust is damaged then investors are more likely to be swept out of the business. These incidents can cause a negative impact and can negatively impact sentiments of investors. Investors who get their hands burned by these kinds of situations won’t be able be confident in private exchanges as there isn’t any recourse forum,” Seinberg added.
Atulya Bhat Co-founder and CMO at BuyUCoin Also, she acknowledged that the sentiment of users is current negative, in particular because of the credit withdrawals take longer than they normally do.
In addition, many financial service providers are not willing to collaborate in conjunction with cryptocurrency service companies due to the recent controversy that he mentioned.
Positively, Bhat said that the changes will focus more on protecting investors. Because the relevant authorities are taking part and comprehending the way the ecosystem operating, protection of investors will be a major concern for exchanges due to the fact that the vast majority cryptocurrency transactions in India are to invest Bhat said.
“Such incidents by themselves may not have a significant impact in the long run however a string of these incidents could. Following the Vauld incident, WazirX is troubled and there are reports that additional exchanges could also be subject to the microscope. If there had been an incident that was not a problem, it could have been forgotten in a couple of months,” Muffipay’s Seinberg said.
Vauld shut down its business in July in the wake of the collapse of Terra Luna as large-scale withdrawals by customers struck it hard.
Seinberg stated that, following the dispute between WazirX and BBN and the ED action The crypto industry needs to anticipate strict action from the government as well as the agencies.
In contrast, UniFarm COO and cofounder Tarusha Mittal has said that the present volatility is temporary, and that experienced investors know the situation.
“The introduction of a handful of excessive tax regimes – particularly for cryptocurrency trading – as well as the ongoing lack of clarity regarding regulations have dissuaded…the knowledgeable investors are now aware that volatility is aspect of the game and opportunities to create wealth are only accessible when one has an approach that is long-term,” Mittal said.