WazirX Now Keeps Rs 250 Crore of User Funds as “Cost Reserves”, Many Upset

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As a seasoned researcher with over two decades of experience in the financial industry, I find myself deeply concerned about the latest developments at WazirX exchange. The allegations that user funds are being used without consent for the exchange’s own interests, particularly for the creation of a new decentralized exchange (DEX), raise serious red flags.

The management at WazirX exchange is facing difficulties once more, as they’ve earmarked a substantial sum of Rs 250 crores from user funds for operational expenses and the development of a brand-new decentralized exchange (DEX), set to launch in 2025.

According to WazirX officials, the reported Rs 250 crore cost reserve fund is made up of an initial sum of Rs 100 crores that was collected from users this September under the pretense of legal, investigation, and restructuring fees. This money was subsequently used to purchase tokens, which in turn generated another Rs 150 crores during the current bull market.

Expanding: Wazirx is withdrawing an extra 150 crores INR, in addition to the existing 100 crores INR, from user deposits for additional costs, and constructing a new Decentralized Exchange (Dex).

— Aditya Singh (@CryptooAdy) December 10, 2024

Nevertheless, some disgruntled users swiftly remarked that the initial 100 crores and subsequently, the extra 150 crores, were user assets being utilized for the exchange’s benefit, without obtaining their approval first.

WazirX does not have our approval or authority to utilize our resources for legal/software development purposes. We are clients, not shareholders, who entrusted our private funds to this questionable entity. This action is unacceptable and will not be tolerated in a court of law. I hope we can bring these crooks to justice!

— Goji Boy (@goji_boy) December 10, 2024

The exchange maintains that no user’s money was utilized in creating the surplus. However, users are counter-arguing, stating that these funds are theirs and were reallocated without their approval. A user on Twitter emphasized the main issue by saying, “Who gave you the authority to utilize our funds for legal and software development? This demonstrates your attitude; you’re treating our funds as if they were partner contributions in a company.

The dispute intensified as professionals raised doubts about the requirement of 2500 crores Indian rupees for constructing a DEX, with their calculations suggesting it could be achieved for just 100 crores. Detractors allege that WazirX is artificially inflating costs to conceal hidden agendas. A user even demanded legal intervention, advocating for authorities to bring WazirX founder Nischal Shetty back to India from Dubai or Singapore for trial on these charges.

#WazirX took our ₹250 crore for a DEX that experts say costs only ₹10 crore.

Nischal deserves jail.

— Justice for WazirX Users (@IndiasCrypto) December 10, 2024

Currently, WazirX management states they require approximately 2500 million Indian rupees (Rs) over the next three years for a cost reserve fund. This money is intended for future expenditures.

According to a statement from WazirX management, an extra 18 million USD (approximately 150 crore Indian rupees) is required for the restructuring process that will span 36 months. The funds will be utilized in several key areas: restarting the WazirX platform, initiating a new business venture called DEX, offering financial support during the recovery phase of the business, and pursuing illiquid and stolen assets – all with the aim of advancing the interests of creditors.

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2024-12-11 12:54