It has been almost a month since WazirX, a major Indian cryptocurrency exchange, suffered a massive cyber attack that resulted in loss of Rs 2000 crore ($230 Million) of investor funds in the form of various cryptocurrencies.
Thousands of angry investors have taken to social media to lodge their protest after WazirX suspended all operations and locked customer funds since July 18, thereby stopping them from withdrawing their own money.
Despite massive pressure from investors, WazirX continues to delay the fund withdrawal process and they have also not given a breakdown of who lost how much money in India’s biggest crypto hack. Their official channel on ‘X’ have assured customers that the withdrawal process might initiate soon but their so-called proposal of customers sharing losses in 55/45 ratio has been met by protests.
A closer scrutiny of the workings of WazirX shows a myriad of complex legal clauses that provides absolute impunity to the exchange, in case of customers from India trying to legally assert their rights. The ‘terms of use’ user agreement document of WazirX, that is binding to all customers, provides a buffer zone of 60 days to resolve claims before they can seek relief legally.
“In the case of disputes, controversies or claims involving Zanmai (the parent company of WazirX), you and Zanmai agree to resolve any claims relating to the agreement through final and binding arbitration. You agree to first give us an opportunity to resolve any claims by contacting us. If we are not able to resolve your claims within 60 days of receiving the notice, you may seek relief through arbitration as set forth below,” reads the terms of use document of WazirX.
WazirX Co-founders in Dubai, Legal Dispute to Settle in Singapore!
To further complicate the matter, the user agreement document of WazirX states that post 60 days of buffer period, customers can approach the Singapore International Arbitration Centre (SIAC) to seek legal relief against Zanmai.
“Either you or Zanmai may submit a dispute for final and binding resolution by arbitration under the arbitration rules of SIAC which are deemed to be incorporated into these terms by reference, read with the Indian Arbitration and Conciliation Act, 1996,” reads the document.
Moreover, the two co-founders of WazirX- Nischal Shetty and Siddharth Menon had shifted to Dubai with their families sometime in 2023. The anxious investors of WazirX are seeking legal remedies to get their funds back, however with such complicated equations in place, they are finding it extremely difficult to take appropriate steps.
Terms of Use Clause 10.2 enables WazirX to withhold your account
A closer scrutiny of the terms of use document reveals that clause 10.2 enables WazirX to indefinitely suspend accounts of customers.
“We may terminate your account or suspend your access to the services at any time and with immediate effect for any reason or no reason, in our sole and absolute discretion. We may decline to process any deposit or withdrawal without prior notice and may limit or suspend your use of one or more services at any time, in our sole discretion,” reads the clause.
Can’t investors seek any legal relief to withdraw their funds?
Technically yes, there is still a silver lining in the terms of use document as clause 14.2 states “Applicable Law” that governs the operations on the WazirX exchange.
“The laws of India excluding its choice of law provisions, will govern these terms and any dispute that arises between you and Zanmai,” reads clause 14.2 of the terms of use document.
It is to be noted here that mere presence of a few arbitrary clauses in terms of use document of a company doesn’t provide them absolute impunity.
However, here lies the tricky part ! Cryptocurrencies are unregulated in India that means the Reserve Bank of India (RBI) doesn’t control or bank them. Moreover, WazirX refuses to identify itself as a financial institution, bank, credit union, trust, hedge fund, broker or investment advisor. It merely calls itself a “technology platform” in their legal documents.
In conclusion, the apathy of the government towards crypto sector, the co-founders living outside Indian jurisdiction and a complicated set of legal clauses has made lives of thousands of investors in India miserable.
Also Read: Thousands of WazirX Hack victims unite on X Space for Justice
