A month after it was hit with India’s biggest crypto hack, WazirX, through its Singapore-based entity Zettai Pte Ltd, has filed an application for a moratorium with the High Court of Singapore under section 64 of Singapore’s Insolvency, Restructuring and Dissolution Act 2018.
According to WazirX owners, the move is intended to provide “breathing space” for the restructure due to a cyberattack that occurred on July 18, 2024. The news has shaken the entire Indian crypto community, raising concern about the possible bankruptcy route that WazirX might take to recover funds of their users.
What is the truth behind WazirX Insolvency Move?
The moratorium application by WazirX is intended to provide Zettai (indirectly WazirX) with the much needed time and legal protection to pursue a restructuring plan for WazirX through a Scheme of Arrangement.
The moratorium seeks to pause legal actions from creditors, buying Zettai time to develop and propose a restructuring plan. The official announcement says that users affected in the WazirX hack could see a pro-rata distribution of available crypto assets. But, this process is expected to take at least six months. This leaves users in the lurch.
If the court approves the moratorium, this plan will aid WazirX to equitably distribute the remaining crypto assets among users who are considered unsecured creditors of Zettai, “proportionate to their holdings”.
Additionally, there are ongoing disputes between Zettai and Binance regarding the ownership of WazirX, which complicates the resolution process. However, WazirX did not share any details regarding it under the very common cause called “confidentiality”.
To explain the moratorium and restructuring process, there will be a town hall meeting, which is scheduled for the week commencing September 2, 2024, During this period, WazirX plans to resume INR withdrawals in phases, although only 66% of the INR balances will initially be available for withdrawal.
If they get approval, the Scheme would legally bind all relevant parties and aim to maximize recovery through various mechanisms. This includes tracing stolen tokens and implementing revenue-generating products.
Conclusion
This announcement is seen as very time-sensitive as just a few hours ago, CoinSwitch, another leading crypto exchange, threatened WazirX to take legal action against it to retrieve INR 80 cr. locked in it. With no recourse in sight, users of WazirX have no choice but to sit back and watch the legal quagmire.
Also Read: All Out War Breaks Out as CoinSwitch Drags WazirX to Court
