Where Did WazirX Get the $150 Crore for Restructuring Expenses?

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As a seasoned analyst with over two decades of experience in the financial and technology sectors, I have witnessed numerous restructuring processes in various industries. The recent development at WazirX, amidst their ongoing recovery following the major hack, is an intriguing case study that sheds light on transparency, strategic financial management, and creditor-centric decision making.

WazirX has requested a temporary halt (moratorium) during their current reorganization phase, triggered by a significant cyberattack that led to the loss of approximately 20 billion Indian rupees’ worth of digital assets.

This action highlighted an important growth, as the allocation for the reorganization expanded from 10 billion rupees to 25 billion rupees. This sparked curiosity among stakeholders, who were inquiring about whether more resources from user deposits had been utilized.

Via X, WazirX made complex alterations clear and straightforward, ensuring transparency and a comprehensive grasp of their reorganization procedure.

What Really Happened?

WazirX explained that the “Cost Reserves,” a ₹250 crore ($30 million) restructuring fund, is an expansion of the initial ₹100 crore ($12 million) reserve established for the reorganization process. This extra ₹150 crore ($18 million) didn’t come from new resources but was gained by smartly managing our treasury by boosting the worth of the tokens already held.

Adopting this method guaranteed that no more resources would be set aside, allowing us to have sufficient finances for a prosperous reorganization without affecting our current holdings.

Why Does This Matter?

The 250 billion rupee fund plays a crucial role in WazirX’s restoration and reorganization. To start, a portion of 100 billion rupees was allocated for expenses such as running the business and paying for expert services.

In addition, approximately ₹150 billion was required for the restructuring plan over the coming three years. This funding would facilitate the relaunch of the WazirX platform, introduce a new decentralized exchange (DEX), maintain the business operations, and help recover or replace any lost or stolen assets, ultimately benefiting creditors.

WazirX emphasized that this fund plays a vital role in enhancing the process of creditor recoveries. By exercising prudent financial strategies, they successfully obtained these additional resources without requiring any more assets. This way, the recovery process remains both equitable and efficient.

Profit Sharing with Creditors

WazirX clarified their approach for distributing earnings during the recovery process. Until the entire 250 crore fund is restored and dispersed among the creditors, all of the company’s profits will be directed towards them. This strategy prioritizes creditors during the restructuring phase.

Once the fund has been completely restored, WazirX will continue to distribute 50% of its earnings to creditors for the subsequent three years, or until all Recovery Tokens are repurchased. This strategy demonstrates WazirX’s commitment to aiding creditors in recovering their funds and reestablishing trust.

By employing this method, we secure the advantage for creditors while keeping user resources intact, thus setting WazirX on a path toward lasting financial recuperation.

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2024-12-10 21:56