Almost eight months after WazirX cryptocurrency exchange was hacked for Rs 2000 crore, the exchange management has kept trading suspended and withheld over Rs 2500 crore worth of users’ funds, as it heads towards a Singapore court approved voting of their customers to get their “restructuring scheme” approved.
The WazirX management is all set to conduct an online voting of their users post March 19 to get their restructuring scheme approved and it will be conducted by Kroll, their legal partner, whose services have been paid out of WazirX users’ money. Over the past two weeks, the exchange management is trying to woo its users to vote in favor of the restructuring scheme.
The conduct of WazirX management and its founder Nischal Shetty has also come under scanner with many users criticizing the manner in which Shetty has blocked critical media and influencers on X (formerly Twitter) who questioned him and the management policies regarding transparency and accountability.
In light of these events, we asked GrokAI of X to present some tough yet pertinent questions to Shetty ahead of the voting process on behalf of WazirX users, based on a certain tweet. The GrokAI did not disappoint and presented four key questions that Shetty needs to answer before voting commences.
In this exclusive article, we will explain the WazirX restructuring scheme controversy and the response by GrokAI. Please note that the response of GrokAI on our prompt and original tweet has been copy-pasted but later more context has been provided for our readers.
What is WazirX Restructuring Scheme Controversy?
WazirX was hacked on July 18, 2024, when one of its multi-signature cold wallets, kept under the custody of third-party Liminal, was breached and cryptocurrencies worth $234.9 Million (Rs 2000 crore) were stolen. The hack resulted in loss of 45% user funds for WazirX which then suspended trading and withheld remaining 55% user funds for the past eight months.
According to the restructuring scheme presented by WazirX management, all users will get 85% of their portfolio amount, as was before July 18, 2024 (the day of cyber hack), if the scheme is voted yes by majority of users and then approved by Singapore Court. The remaining 15% will be available to users in the span of next 2-3 years when WazirX restarts trading on its platform and
WazirX, an India based exchange, has chosen to approach Singapore Court via its Singapore parent entity Zettai Pte Ltd. The 85% portfolio restoration offer by WazirX has also met with controversy as many users have alleged that their portfolio amount has been wrongly displayed by the management.
GrokAI asks 4 tough questions to WazirX
Based on a particular tweet, we gave a prompt to GrokAI, asking it to ask some critical and tough questions to WazirX management and its founder Nischal Shetty.
Based on the above mentioned tweet’s context, we have paraphrased GrokAI’s response in the following paragraphs.
“Based on the context provided in the X post by Vaibhav (@VJ_CryptoTimes, Post ID: 1899440150448591066) and the related web results, here’s a list of “tough questions”.
GrokAI Question 1: Why the multi-signature wallet, controlled by WazirX and a third-party provider (Liminal), was compromised by hackers (allegedly from the Lazarus Group)?
Ever since the hack, WazirX management has squarely blamed its erstwhile security partner Liminal Custody for their failure to secure funds and then have even alleged culpability on their behalf. Later, Shetty shifted the blame to North Korea based Lazarus Group for the hack.
The local investigation carried out by Delhi Police have pointed fingers at a Bangladesh based crypto investor who allegedly paid his Indian co-conspirator to make a dummy WazirX account and breach the cold wallet. Police have only arrested the Indian mule till now and the case has reached a dead end due to diplomatic tensions between India and Bangladesh.
GrokAI Question 2: Shetty’s leadership decisions, including his claim that he couldn’t compensate users because he didn’t own the company, which Binance later contradicted by accusing him of misleading customers.
Post the hack, Nischal Shetty had revealed that for the past two years, there is an ongoing ownership dispute between WazirX management and Binance over the platform. None of the parties want ownership and responsibility of 4.4 million users and according to Shetty, Singapore entity Zettai Pte Ltd was handling WazirX “under protest”.
At a point of time, Shetty also tried to put responsibility of his exchange users to Binance which was promptly trashed by the latter and its founder CZ.
GrokAI Question 3: The controversial recovery scheme proposed by WazirX, which some users and influencers criticized as favoring the company over customers, as noted in the web results.
Ever since WazirX has announced its recovery scheme, many users have pointed out discrepancies in their portfolio and have also accused Nischal of benefitting from a tragic hack. The fact that Shetty and management reserved Rs 100 crore of user funds for legal and administrative fees has also not gone down well with the users.
GrokAI Question 4: Why WazirX relied on a vulnerable third-party provider, Shetty’s personal responsibility, or the feasibility of the 85% recovery scheme.
GrokAI has rightly questioned WazirX exchange over the feasibility of ensuring 85% funds restoration of its 4.4 million users when the management is undergoing a crisis and has failed acutely to manage industry loans.
Conclusion: GrokAI gets it right but will WazirX respond?
Before voting commences for 4.4 million users of WazirX, its is imperative that the exchange management and its founder Nischal Shetty come clean on few burning questions by the platform users whose funds have been stuck for the past eight months.
Also Read: WazirX legal partner Kroll to hold voting of users from March 19-28
