A hearing was held in the Supreme Court of Singapore recently where Indian crypto exchange WazirX has been given an extension for four months to repay its debt accrued as a result of a $230 million hack that hit the platform in July this year. The move provides interim relief from legal actions, allowing to concentrate on recovery, restructuring, and resolution. The exchange sought a six-month moratorium, but the court granted only four months with certain conditions.
The Conditions Set by the Singapore Court
Consequently, WazirX has to fulfil a few primary conditions per the court verdict. It just needs to Give out its wallet addresses in a court affidavit, thus openly declaring its possessions. Next, the platform will need to address any queries asked and answered concerning legal proceedings. Once the deal is complete, the exchange has six weeks to disclose its full financial accounts, and any voting on its future path will be conducted through an independent platform.
Nischal Shetty, Co-founder, said, “We are grateful for the court’s judgment, which enables us to focus on our journey of resolution, recovery, and strengthening. The move is viewed as a landmark one for the platform, which had hoped to regain the trust of both the customers and the creditors.
The Impact of the July Hack
However, the hack saw approximately 45% of users’ funds stolen and had damaging consequences. Ever since, the exchange has been trying to retrieve the lost amount and satisfy its users. Earlier this month, WazirX hinted that users would have to settle for a 55-57% return of the funds.
To mitigate the condition, WazirX has relaxed the withdrawal hold and allowed users to take back 66% of their INR available with them. Although, it does not have enough reserves to hold or withdraw crypto tokens right now.
Restructuring and Future Plans
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On August 23, 2024, Zettai which is based in Singapore and also the parent company of WazirX, filed for restructuring. The court moratorium gives it some breathing time from legal troubles so it can frame a proper recovery plan. Among the initiatives contemplated is securing a strategic investment to provide liquidity to the company, building products that can generate revenue and investigating methods for tracking and reclaiming seized assets, the company said.
WazirX reported that it is talking to as many as 11 exchanges and has signed non-disclosure agreements with three so far. These deals are intended to help the company get out of this crisis, but at the moment, no deals have been made yet.
To ensure transparency during this period, one of the conditions imposed by the court ruling demands. The court will now have to ensure that any subsequent voting on the restructuring proposal is done on a third-party platform so all sides are fairly represented in the process, the exchange said. To prevent any manipulation in the restructuring process that would permit creditors to participate fairly in fixing the company.
Allegations and Blame
Moreover, the hack has resulted in accusations being made public. Liminal Custody is WazirX’s wallet service provider, and initially, WazirX said that its funds in Liminal Custody were compromised during a phishing attack. But Liminal said the cyberattack was not its fault (CQ, CQ), and an independent investigator found no evidence of that. However, WazirX denial or not, the situation has continued to cast suspicion on WazirX.
Besides this, WazirX founder Nishal Shetty has also blamed Binance for the troubles and claimed that Binance was in control of a large part of WazirX funds. However, Binance has refuted these claims, saying that it never owned, operated or controlled WazirX and even accused Shetty of trying to pass the buck.
Conclusion
The Singapore court has given a 4-month moratorium, which will help WazirX ease through this tough time. Under the terms of the deal, which require disclosures of wallet addresses and for the restructuring efforts to be independently overseen, the exchange now has an opportunity to redeem its reputation with users.
The coming months will be crucial as WazirX seeks to recover stolen funds, secure new partnerships, and stabilise its operations. With legal challenges looming, the exchange’s future remains uncertain, but the focus remains on recovery and delivering a fair outcome for all stakeholders involved.
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