As a seasoned researcher with a keen eye for detail and years of experience navigating the complex world of digital finance, I find myself deeply troubled by the ongoing saga surrounding WazirX. The recent hack that resulted in the staggering loss of $234 million has left many users, including myself, feeling uneasy about the future of their investments and the transparency of platform operations.
After the high-profile cyberattack on WazirX that occurred recently, I had the opportunity to participate in a webinar discussion held on September 25, 2024, which served as a valuable forum for users like myself to express our worries and share insights about safeguarding our digital assets.
Due to a security breach that led to around $234 million worth of user funds being stolen, numerous investors are now worried about the safety of their investments and the openness of the company’s business dealings.
During the online seminar, several participants expressed inquiries regarding the management of user assets and the timeline for withdrawing their remaining account balances. Additionally, doubts have surfaced about WazirX, Zettai, or Nischal possibly utilizing 100 crores of user funds towards legal proceedings, despite assertions of a 1:1 proof of reserves.
The user inquired about when they can take out their remaining money from WazirX. WazirX replied that it’s only feasible to process withdrawals once the restructuring plan, referred to as a Scheme, has been accepted by creditors and authorized by the High Court of Singapore.
Users have expressed annoyance about their frozen investments after switching services, inquiring when they can retrieve their funds. WazirX explained that withdrawals won’t be possible until a restructuring plan is accepted by creditors and the Singapore High Court, which may take at least half a year. Until then, trading remains halted; however, Zettai will manage withdrawals based on approved terms once they are finalized.
On the opposite end, users argue that the platform is concealing its financial status, as it appears to possess the resources to compensate users. They point out that platforms such as BingX have successfully navigated similar circumstances.
Nevertheless, WazirX disclosed that as of July 18, 2024, Zettai had a total of $546.5 million in debts and a shortfall of assets by 45%. This implies that the value of their assets is only sufficient to cover 55% of these debts, with the majority being owed to customers.
After raising a question about permission to utilize user funds, there were lingering issues about accountability. To address these concerns, it was explained during the revamping of WazirX that the expenses being covered encompass operational costs, court cases, and detective work aimed at retrieving misappropriated resources.
Beyond this point, these expenses are essential for maintaining the platform’s operation, streamlining the voting process related to the restructuring plan, and enhancing user recoveries by offering income-producing products. Additionally, legal fees are being accrued to secure a binding and orderly restructuring. Zettai, responsible for WazirX, is actively pursuing emergency funding from potential collaborators to meet these expenses.
One user also questioned WazirX’s ability to control cryptocurrency when users cannot withdraw their funds. It was explained that WazirX operates through Zanmai Labs for INR transactions, while Binance handled crypto operations until January 2023.
Following Binance’s shutdown of operations, Singapore-based Zettai Pte Ltd has assumed a degree of oversight over the cryptocurrency assets, yet it does not handle deposit management directly and is currently in disagreement with Binance regarding the termination.
In response to your query about WazirX’s policy on significant withdrawals following a cyberattack and the restriction on Indian users withdrawing their cryptocurrency, let me clarify that the assets were not taken through a user’s withdrawal but rather as a result of the unauthorized access during the cyberattack.
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2024-10-17 00:20