As a long-term crypto investor with a significant portion of my portfolio on WazirX, I find myself increasingly dismayed by the latest developments surrounding this exchange. The proposed recovery plan seems to offer more questions than answers, leaving users like me in a state of uncertainty and frustration.
Over a month since the WazirX cryptocurrency exchange suffered a cyber-attack leading to the theft of 45% of user assets and the temporary halt of withdrawals, the exchange administrators have at last unveiled their restoration strategy to affected customers on a recent Friday.
As a researcher studying this development, I find myself concerned about the potential implications for WazirX customers. The proposed plan offers no definitive timeline for the return of all cryptocurrency funds and only allows 66% of INR funds to be withdrawn in two stages for each user. This situation leaves users with potentially more risk than reward, as they may stand to lose a significant portion of their assets without a clear path towards recovery.
Currently, WazirX is providing a reduction of 20 cents or Rs 15 on the fee charged for INR withdrawals to all its users. Additionally, they have temporarily held back 34% of the INR funds belonging to each user. They assure that these funds will be returned as soon as an ongoing investigation by law enforcement agencies is completed and the results are announced.
What is WazirX Withdrawal Plan?
In simpler terms, users on WazirX can only withdraw 66% of their Indian Rupee (INR) funds in two separate installments, and currently, there are no immediate plans for full crypto withdrawal. On July 18th, a security breach was discovered in one of WazirX’s multi-signature digital wallets that led to multiple unauthorized cryptocurrency transactions worth approximately Rs 2000 crore ($230 Million). However, WazirX assures no customer INR funds were affected by this incident.
WazirX has chosen to restrict 34% of all users’ Indian Rupee (INR) funds due to ongoing investigations by law enforcement agencies into questionable activities by third parties associated with Zanmai, WazirX’s parent company. The exchange promises to release these funds once the investigation concludes; however, there is no assurance regarding the timeframe for this return. It’s important to note that Zanmai itself is not being investigated by authorities.
It’s worth mentioning that in a probe concerning money laundering, conducted by India’s Enforcement Directorate (ED) in 2022, WazirX assets were temporarily seized. The ED found indications that the exchange owner, Nischal Shetty, may have been trying to hide the ownership of the platform.
Furthermore, the exchange has committed to presenting a Scheme of Arrangement plan, governed by Singapore’s Insolvency, Restructuring and Dissolution Act (2018 or “IRDA”), within their regulatory framework as an effort to find a 100% recovery solution for the cryptocurrency funds. This process requires creditor approval and court sanction, with the goal of providing stronger recoveries compared to liquidation.
According to the statement from WazirX, a legally binding agreement – approved by creditors and sanctioned by the court – will apply to both the company and its creditors. The Insurance Regulatory and Development Authority (IRDA) has established specific timelines, requirements, and court procedures to provide creditors with sufficient information needed to make a wise decision regarding the proposed terms.
WazirX to Approach Singapore High Court to further delay withdrawals?
Furthermore, the WazirX cryptocurrency platform and its associated company, Zanmai Private Labs Limited, plan on petitioning the Singapore High Court for an extension of time. This is intended to provide WazirX with sufficient space to carry out a seamless process of recovering customer assets.
According to earlier reports by The Crypto Times, WazirX’s user agreement policy includes a 60-day waiting period if there’s a disagreement between users and Zanmai about their funds. After this waiting period, customers can take further action by contacting authorities in Singapore to recover their funds, as stated in the policy.
It seems that WazirX is planning to ask the courts in Singapore for additional time, which could imply a delay in the process. Consequently, users may need to be patient for several months before they can fully recover their funds, whether they are cryptocurrencies or Indian Rupees (INR).
Also Read : WazirX says no crypto withdrawals, only 66% INR for users
Conclusion
In simple terms, the latest statement from WazirX seems vague and lacks clear guidance for returning users’ funds. It appears they have not provided a detailed plan to bring transparency. Unfortunately, the struggle for WazirX users persists.
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2024-08-23 20:53