On September 30 night, Nischal Shetty, the co-founder of WazirX crypto exchange, took to ‘X’ (formerly Twitter) to announce that things are going as per his scheme and he is putting together a committee of creditors to ensure that every voice is heard in the wake of Rs 2000 crore hack of the exchange.
On surface level, the tweet by Shetty seems perfectly innocuous and well-intended from a guy who is running the show, however, when you scratch beneath the surface, it is then that the gloves come off.
Both Shetty and WazirX official twitter handles have turned off comments on their posts, after facing huge backlash from exchange users whose money in crypto has been stuck for more than two months since the July 18 hack. Shetty had also received criticism in the past for organizing a poll on his own platform with only yes as an option, until a judge in Singapore reminded him of the fallacy.
Continuing with the WazirX hack saga, the Singapore High Court granted a four-month moratorium which means a four-month relief for the exchange management. On the other hand, it means a prolonged waiting period for the already anxious millions of exchange users in India. This development raises crucial questions about the future of exchange and its implications for various stakeholders in the crypto space. But what does this moratorium mean for WazirX and the broader crypto market? Let’s unfold.
What Does the Moratorium Mean for WazirX Stakeholders?
For employees, investors, and users, the moratorium provides a mixed bag of hope and uncertainty. This moratorium is just a temporary shelter from the storm, protecting WazirX and Nischal Shetty from legal action for the next few months.Â
It is an opportunity for the exchange to reorganize things and turn the tables in their favor. However, this lifeline comes with strings attached as the moratorium is conditional and the exchange has to follow some essential rules.
- WazirX has to reveal its wallet addresses through an affidavit.
- They have to be transparent with the users and properly respond to their queries.
- A detailed financial report is due within six weeks.
- Any voting on the exchange’s assets must happen on an independent platform.
These rules showcase that the court is willing to give WazirX a chance, but it’s not writing a blank cheque. However, this moratorium could also be a ray of hope for users as the exchange might find a way to potentially return some of their lost funds.Â
Furthermore, these four months will be nail-biting for the users and for employees, it’s a period of uncertainty, with job security hanging in the balance.
Will WazirX Bounce Back From Here?
Picture this: WazirX rebounded from this situation and returned most of the user’s funds, standing firmly with their users and employees. If this happens, the exchange’s situation will be totally different as it will set a benchmark for the crypto space on how this Indian exchange fights against hackers and gives justice to its users.
However, this will only happen when Nischal Shetty, the Co-Founder of WazirX acts responsibly which he has not done in the past situations. WazirX managememnt has also claimed that they are actively seeking for partnerships, white knights, and are in talks with major exchanges globally and signed NDAs with three potential partners. This shows they still have some good cards to turn the game in their favor.
Furthermore, the road to recovery of the funds seems closed as according to the on-chain data the majority of the stolen funds have already been washed through the use of Tornado Cash, making recovery a tough task.
The Regulatory Ripples caused by WazirX Hack
The WazirX incident has sent shockwaves to the crypto ecosystem in India and other Asian countries. Indian government already doesn’t give much importance to crypto, despite having one of the largest crypto user bases in the world and this case could worsen the situation more. The government could treat it as an opportunity to implement stricter rules for crypto businesses.
This could stir up trouble for other crypto exchanges worldwide. We could see a push for more strict security audits, compulsory insurance policies, or even restrictions on the types of cryptocurrencies that can be traded. Moreover, countries that are unsure about cryptocurrencies might accelerate their efforts to establish comprehensive frameworks. We could witness some strict regulations such as:
- Stricter licensing requirements for crypto exchanges.
- Mandatory security audits and protocols.
- Enhanced KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures.
- Limits on the amounts that can be held in hot wallets.
Nevertheless, these security measures will be beneficial for the traders, investors, and the crypto platform itself and also improve the trust of retail users regarding these platforms.
Conclusion
Is this the end for WazirX or a new beginning? Well, it’s too early to predict, as anything can happen in the crypto space. But undoubtedly the exchange is at a crossroads. If the exchange secures strong partnerships, tightens security, and regains the user’s trust, then there is a change for their bounce back.
However, the significant fund loss and the damaged reputation are the hurdles that can’t be understated. The crypto world has seen comebacks before, but WazirX’s situation is quite difficult. Now, their future decisions, partnerships, and ability to handle the situation will define whether it is the end of the road or the beginning of a remarkable comeback story.
Also Read: Did WazirX really need a judge to introduce transparency for Users?
