As a seasoned crypto investor with a fair share of ups and downs under my belt, I find myself once again navigating the murky waters of a controversial decision by an exchange. The recent restructuring proposal by WazirX management has left me feeling rather disillusioned, to say the least.
On Monday, WazirX exchange administration, in relation to Zettai Pte Ltd, proposed a plan for restructuring that aims to compensate affected users. This plan clarifies that past platform profits will not be distributed among the users. The exchange has disclosed that the compensation process will follow a “pro-rata” system, which means that users can anticipate a 45% reduction in their overall investment with WazirX.
On Monday, I participated in a townhall event hosted by the WazirX team on YouTube. During this event, they presented a restructuring plan to users who have experienced fund losses following the July 18 cyber attack that resulted in approximately INR 2000 crores of cryptocurrencies being stolen from their platform. The meeting included WazirX CEO, Nischal Shetty, as well as Jason Kardachi and George Gwee from Kroll.
During the town hall meeting, the WazirX team explained the reorganization plan for Zettai. They made it clear that the “assets” of Zettai consist of funds remaining on the exchange after the hack, any tokens retrieved from the hack, tokens earned through profit sharing once the restructuring begins, and tokens produced from collaborations related to the proposed restructuring. According to WazirX, the total estimated value of these assets is approximately $301,787 for Zettai.
Furthermore, it was made clear that certain tokens (referred to as “ringfenced tokens”) held for trust creditors, a cost fund of Rs 100 crores, and profits stemming from the restructuring process have been excluded. The management has chosen not to disclose the specific amount that doesn’t pertain to the restructuring process.
Previously, The Crypto Times disclosed information about WazirX’s (Zettai Pte Ltd) financial statement for 2022. In this report, total revenue amounted to around $108 million USD or approximately Rs 908 crores. However, nearly $98 million USD, which is equivalent to Rs 821 crores, was spent on marketing, administrative costs, and other expenses as per the company’s management. After taking into account sales, marketing, and administrative expenses, the reported profit for 2022 was just $7 million USD.
The news has sparked frustration among WazirX users, who are querying why the leadership insists that users bear the burden of a cyber attack, yet appears unwilling to reciprocate by sharing their profits with them.
At the meeting’s conclusion, a question-and-answer period took place to alleviate creditors’ doubts and clarify any misunderstandings. During this session, a creditor questioned why WazirX wasn’t using the accumulated earnings from recent years to reimburse hack victims. In response, Nischal Shetty emphasized that WazirX had been sold in 2019, and the current owner, Zettai, doesn’t have claim to any of those profits.
When questioned about where WazirX’s profits were going, Nischal Shetty quickly responded, ‘Not Zettai.’ When asked if the profits were going to Binance, Shetty replied, ‘I can only speak for Zettai.’”
Currently, Zettai is undergoing a reorganization to tackle a 45% shortfall in assets compared to its liabilities following the hack. The company has presented a scheme of arrangement to the Singapore High Court, requiring user support to endorse their petition. This plan aims to equitably distribute remaining assets among creditors, recover stolen tokens, and explore possible revenue-sharing prospects.
Should the proposal be approved, creditors will be able to collect their payouts in preferred digital tokens, equating to approximately 55 cents for every dollar of their initial claim value.
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2024-09-16 19:18