WazirX exchange is now live at Singapore High Court with their moratorium application, seeking a six months grace period withholding any legal action against them, till they come with a restructure plan to compensate their users in India, post the hack. The court proceedings at Supreme Court chamber of Singapore HC is live now at 12 PM IST where judge Assistant Registrar Jacqueline Lee is hearing the moratorium application filed by Zettai Pte Ltd (WazirX) through their representative Raja and Tann Singapore LLP.
The court proceedings will be a curtailed event with only registered WazirX users allowed to view them through a Zoom conference link. Meanwhile, WazirX co-founder Nischal Shetty held a Townhall discussion on Monday, livestreamed on Youtube, where he explained the moratorium application to the users.
On July 18, 2024, WazirX, a prominent Indian cryptocurrency exchange, suffered a significant cyberattack. The attack targeted one of its ERC-20 multisignatory cold wallets, resulting in the theft of approximately $234 million ((around ₹2000 Crore) in crypto assets.
This event led to an immediate halt in crypto and INR withdrawals, known as the “Withdrawal Freeze,” and later a freeze on trading activities termed the “Trading Freeze.” These actions were necessary to stabilize the situation and assess the damage.
WazirX Moratorium Explained
To navigate through these challenges and address user balances, WazirX has pursued a restructuring plan under a Scheme of Arrangement in Singapore. This restructuring is designed to distribute remaining crypto assets to users in a fair, pro-rata manner, focusing on equitable recovery and improved token values. Some of the highlights of the restructuring process include:
1. Engagement of a White Knight: The platform aims to attract a capital provider or partner to support its recovery efforts and enhance token value.
2. Revenue-Generating Products: Introducing new products and mechanisms to generate revenue and share profits with users.
3. Asset Recovery: Continuing efforts to trace and recover stolen crypto assets.
4. Rs 100 crore taken from User Funds for Legal Costs: WazirX has announced that it has set aside Rs 100 crore worth user funds to pay for legal expenses it incurs during the process of moratorium.
Explaining the restructuring process
The restructuring process, expected to take at least six months, is not to be confused with insolvency, liquidation, or bankruptcy. Instead, it represents a structured plan to resolve financial challenges and provide users with a viable path to recovery.
Under this plan, users will become contingent unsecured creditors, meaning they have a claim on the platform’s assets but their recoveries are dependent on the outcome of ongoing disputes.
To facilitate this restructuring, WazirX has applied for a moratorium from the Singapore High Court. An automatic 30-day moratorium commenced on August 27, 2024, allowing WazirX the necessary time to develop a comprehensive restructuring proposal.
This moratorium is crucial for shielding the platform from immediate legal actions and enforcement measures while it works on a solution. A court hearing to decide on the extension of this moratorium is expected by September 26, 2024.
INR Withdrawals and User Support
Amidst these efforts, WazirX has managed to reopen INR withdrawals on August 26, 2024. Users can withdraw up to 33% of their INR balances until September 8, 2024. From September 3, 2024, users will be able to access remaining 33% of their INR balances, providing much-needed liquidity as the platform continues to resolve crypto-related issues.
Also Read: Nischal says WazirX Don’t Know Who is Responsible for User Crypto Funds
