Despite facing heavy criticism over its decision to allocate INR 100 crores from user funds to bear “legal costs”, WazirX exchange management re-affirmed on Saturday that users should fund the legal battles the exchange is facing after the July 18 hack.
The Crypto Times had reported that post the Rs 2000 crore cyber hack, WazirX co-founders and parent company Zettai Pte Ltd is facing several legal cases with either third parties like Binance or their own customers. In that regard, WazirX had earlier announced that it has set aside $12 Million (over Rs 100 crores) for legal and operational costs.
This decision by WazirX had invited wrath of several users who demanded the rationale behind the exchange using their money to fight legal cases filed by different parties including some of their own customers. As per an affidavit filed by Zettai in Singapore High Court, the exchange management is facing four legal notices apart from an ongoing tussle with Binance.
On Saturday, WazirX announced through a thread on X that it plans to use customer funds to manage its ongoing legal battles after they filed a moratorium application in the Singapore HC.Â
“The legal costs associated with the restructuring and legal proceedings are important to ensure that any restructuring will be legally binding and can be implemented in an orderly manner. There are also legal costs for ongoing legal proceedings which Zettai continues to pursue. These costs have to be funded from the assets of Zettai,” read the official statement of WazirX exchange.
WazirX also claimed that their parent company Zettai is actively working with “potential white knights” for rescue financing which may be applied to defray costs as discussed.
WazirX, under its parent company Zettai, has applied for a moratorium to the High Court of Singapore. The primary goal is to gain “breathing space” to devise a solution for restoring crypto balances that were affected by a cyberattack on July 18 2024, where over $230 million worth of assets were stolen.
If it passes, the moratorium will bring several reliefs for WazirX exchange, including preventing any resolution for winding up the company and halting legal actions against Zettai without the court’s approval.
According to WazirX, these measures are intended to protect the company while it negotiates with potential investors to aid user recoveries. However, there is not much for the victim users of WazirX in the moratorium as the legal experts have opined that all users are expected to take atleast 43% hit on their overall funds.
While WazirX insists that using customer funds to fight its legal battles is in the best interest of its users, this decision has faced backlash from the community. WazirX has also announced that cryptocurrency trading will remain suspended until a restructuring proposal is approved by creditors and sanctioned by the High Court of Singapore.
Also Read: Exclusive: Are these North Korean Hackers behind WazirX Hack?
