As a long-time crypto investor and user of WazirX exchange, I find myself both concerned and intrigued by the recent developments surrounding the platform. The cyber hack that occurred on July 18, resulting in the loss of $234 million worth of cryptocurrencies, has left many users, including myself, in a state of uncertainty.
In a recent court filing, WazirX crypto exchange leaders stated that 441 of their users have expressed support for their restructuring plan, which aims to compensate affected users following the July 18 cyber attack that cost approximately Rs 2000 crore. This represents just 0.0001% of WazirX’s total 4.2 million active users who were impacted by the hack.
WazirX’s leadership, relative to Zettai Pte Ltd (their parent company located in Singapore), have a court hearing planned on September 25 at the Singapore High Court. The purpose is to request a moratorium, which if granted, would prevent any legal actions against them for the upcoming six months.
On Tuesday, Nischal Shetty, co-founder of WazirX and director at Zettai, shared a second affidavit with users. In this document, Shetty stated that the exchange received approximately 1700 emails regarding the moratorium and restructuring plan. Out of these emails, only around 500 email addresses were confirmed as valid, and out of those, about 441 have expressed support for the exchange’s management.
As a crypto investor keeping a close eye on Zettai’s situation, I was glad to learn that many creditors have expressed their support for the moratorium proposed by Zettai. By the morning of September 9, 2024, Zettai had received over 1700 emails from platform users in response to the moratorium application. They are currently verifying the support they’ve received. Out of the 500 emails confirmed so far, 431 show approval, which translates to approximately USD9,200,000 in liabilities in total.
In the affidavit, Shetty stated that Zettai will keep both this Honorable Court and its creditors informed as we receive additional support from these parties. Emails received daily will be verified and assessed. The aid provided so far has been encouraging, and I expect that as Zettai clarifies the reasons for this application to creditors and shares more details about the proposed scheme, backing for the moratorium will increase.
On July 18 of this year, an unidentified group of hackers managed to gain access to WazirX exchange’s multi-signature wallet, resulting in the theft of approximately $234 million worth of cryptocurrencies. This represents 45% of user funds. Since this security breach occurred, WazirX has temporarily suspended all withdrawals on their platform and have sought a six-month reprieve from the Singapore High Court to protect themselves against any potential legal action.
Currently, WazirX is permitting only 66% of INR withdrawals for all its users and keeping 100% of their crypto assets on hold, according to Shetty. The reorganization strategy of WazirX aims to distribute losses evenly among all users following the hack, a move that has upset millions.
Why WazirX needs users’ support in Singapore High Court?
Nischal Shetty, one of the founders of WazirX, outlined a plan for the exchange’s future actions. He explained that WazirX will disclose to the Singapore High Court the support emails they received regarding their moratorium application. If granted, the court will decide on the application, and if approved, WazirX will conduct a vote among its users. For the proposed restructuring plan to pass, more than 50% of the participating users must favor it, and the total value of votes from each user class should exceed 75%. In other words, a majority of users by number and a supermajority in terms of value must approve the plan.
Should the plan gain user approval, WazirX intends to secure judicial endorsement for it within the subsequent 30 days through Zettai, following which they will endeavor to put it into practice. However, an exact implementation date remains uncertain at this time.
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2024-09-10 19:48