As a seasoned researcher with years of experience in the cryptocurrency market, I find myself deeply concerned by the recent developments surrounding WazirX. Having witnessed several ups and downs in this dynamic industry, I can’t help but feel a sense of déjà vu as yet another major player seems to be on the brink of collapse.
Approximately a month following the largest crypto hack it experienced, WazirX – via its Singapore-based entity Zettai Pte Ltd – has submitted an application for protection to the High Court of Singapore under section 64 of the Insolvency, Restructuring and Dissolution Act of 2018. In simpler terms, this means they are seeking legal safeguards provided by the mentioned act due to financial distress caused by the hack.
Based on WazirX representatives, this action is aimed at creating a “temporary pause” for reorganization following a cyber incident that transpired on July 18, 2024. This development has caused ripples across the Indian cryptocurrency sector, sparking worries about potential bankruptcy proceedings that WazirX may resort to in order to restore their users’ funds.
📢 We are informing all WazirX Platform users that we have filed an application for a moratorium in the Singapore High Court to address concerns about user crypto balances resulting from the cyberattack on July 18, 2024.
— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) August 28, 2024
What is the truth behind WazirX Insolvency Move?
The request for a moratorium from WazirX serves as a means to grant them essential time and legal safeguards, enabling them to develop and implement a restructuring strategy for WazirX using a Scheme of Arrangement.
1. The moratorium aims to temporarily halt creditor lawsuits, granting Zettai valuable time for plan development. The official communique indicates that victims of the WazirX hack may receive a proportionate distribution of remaining crypto assets. However, this procedure could take up to six months, leaving users in a difficult position.
Should the court endorse the moratorium, this strategy would help WazirX fairly allocate the leftover cryptocurrency assets among the unsecured creditors of Zettai, according to the size of their respective holdings.
Moreover, the ownership of WazirX is a contentious issue between Zettai and Binance, making it challenging to find a resolution. Yet, WazirX has maintained silence on the matter due to the commonly used reason of “confidentiality”.
To clarify the moratorium and restructuring procedure, we’ve arranged a town hall gathering that’s set for the week starting September 2, 2024. During this time, WazirX intends to gradually restore INR withdrawals, with only approximately two-thirds of the INR balances accessible for withdrawal initially.
Should they secure approval, the Proposal intends to establish a binding legal agreement among all pertinent entities, with a focus on recovering as much as possible using different methods. These methods encompass tracking down stolen tokens and creating income-generating products.
Conclusion
This announcement is considered urgent due to a recent threat by CoinSwitch, a prominent crypto exchange, to take legal action against WazirX within hours. The dispute involves approximately 80 crore INR that has been withheld in WazirX. At present, users of WazirX are left without any immediate resolution and must anxiously observe as the legal battle unfolds.
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2024-08-28 16:36