WazirX Restructuring Plan Heads to Court in January; Risk of Liquidation If Rejected

WazirX lost over $230 million (roughly Rs. 1,900 Crore) in a hack on July 18.

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 20 December 2024 19:23 IST

Photo Credit: WazirX

The Singapore Court will hear WazirX’s scheme on January 22, 2025

Highlights

WazirX’s stolen funds still remain untraced and unrecovered
The scheme needs at least 75 percent favouring votes from creditors
The hacker(s) responsible for WazirX hack remain unidentified

WazirX users affected by the July hacking incident may face a longer wait for clarity on compensation. In a recent update, Zettai announced plans to present its proposed financial restructuring scheme to the Singapore Court on January 22, 2025. Zettai, the Singapore-registered entity managing WazirX's crypto assets, oversees the Indian exchange, which lost over $230 million (roughly Rs. 1,900 crore) in the July 18 attack. Since the hack, WazirX has yet to fully restore its services and continues to face intense criticism on social media.

In a statement to Gadgets 360, Zettai confirmed it is awaiting Singapore Court approval to present its restructuring scheme to creditors. This means WazirX creditors may have to wait at least another month before any compensation is disbursed.

If the court allows the proposal to proceed, the scheme will require at least 75 percent approval from creditors to take effect. Only with this majority vote will the restructuring plan be implemented.

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Amid mounting criticism, WazirX has disabled comments on its posts on X.

:loudspeaker: The Road Ahead

We're moving step-by-step towards recovery – if the Scheme is approved by Scheme Creditors:

» We are striving to obtain the court's sanction of the Scheme at the earliest feasible timeline.
» Subject to legal and regulatory requirements, Platform to resume… pic.twitter.com/kIyYZmHs0v
— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) December 19, 2024

Zettai has highlighted that if creditors reject the proposed restructuring scheme, liquidation remains the only alternative for WazirX.

Emphasising that approval of the scheme is the quickest path for creditors to recover funds, Zettai stated, “Under a liquidation, the earliest that creditors can receive a distribution is in two-to-three years which is also likely to be lower in recovery due to costs of the liquidation.”

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If liquidation becomes necessary, WazirX must first resolve its ongoing dispute with Binance, a matter the company describes as confidential and uncertain. The WazirX-Binance dispute began around 2021 when both parties initially stated that Binance had acquired WazirX. However, in 2022, Binance denied completing the acquisition, while WazirX maintained that Binance was its owner. This ambiguity has persisted for nearly two years and could take additional time to resolve.

As a result, WazirX creditors face a wait time ranging from two months to three or more years before receiving compensation.

Key Details of WazirX's Planned Restructuring Scheme

As part of its restructuring plan, WazirX intends to issue recovery tokens to its creditors. These tokens can be traded in the market during the ongoing bull run, where BTC is fluctuating between $97,000 (roughly Rs. 82.6 lakh) and $108,000 (roughly Rs. 91.7 lakh).

Earlier this month, the exchange stated that, “under its planned scheme the net available liquid funds, which currently represent over 100 percent of the USD value of liabilities as on 18th July 2024, will be disbursed to scheme creditors in the proportionate token balances held in their portfolio, ensuring they benefit from the ongoing crypto bull run.”

The exchange has yet to provide detailed information about the scheme, which is expected to be disclosed after January 22, 2025. However, it stated that if the scheme is approved, initial fund distributions would begin within 10 business days.

Five months after the hack, the stolen funds from WazirX accounts remain untraced and unrecovered. In November, WazirX founder Nischal Shetty announced plans to develop India's first decentralized exchange within the next twelve months.

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Further reading: Cryptocurrency, WazirX, Singapore, Zettai, Liquidation, Binance Dispute

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More