WazirX Seeks Six-Month Moratorium for Restructuring After Significant Hack Losses

Indian cryptocurrency exchange WazirX has formally requested a six-month moratorium from the Singapore High Court to restructure its financial liabilities. This announcement, made on Wednesday, comes in the wake of a significant security breach that resulted in a loss of approximately $230 million in July. The move is intended to provide the company with breathing room to navigate the aftermath of the hack and its ongoing disputes.

As part of this legal process, an automatic moratorium period of 30 days will begin immediately. During this time, the court will consider the request and determine whether to grant the full six-month period for restructuring. The date for the hearing, in which the court will evaluate the merits of the application, has yet to be scheduled.

Co-founder Nischal Shetty submitted a supporting affidavit to the court under the name of Zettai Pte, a company incorporated in Singapore. Zettai is the parent company of Zanmai India, which operates the WazirX platform. This complex corporate structure emphasizes the interconnectedness of the entities involved, particularly as WazirX is currently embroiled in a legal dispute with Binance regarding the ownership and operational control of the exchange.

In its blog post addressing the situation, WazirX acknowledged that due to “confidentiality obligations,” certain details surrounding the ongoing dispute with Binance cannot be disclosed at this time. However, the affidavit includes a request for the court to issue orders that would prevent any winding up of Zettai. This includes stipulations that no legal actions, such as execution or distress against Zettai’s properties, can be initiated without the court’s permission.

Implications of the Moratorium for WazirX Users

The proposed moratorium is designed to provide Zettai with the necessary space to restructure its operations while addressing users’ cryptocurrency balances on the platform. WazirX emphasizes that this restructuring is crucial for ensuring that affected users can recover a portion of their assets following the cyberattack.

According to the announcement, the restructuring plan outlines that the financial impact from the cyberattack will be allocated on a pro-rata basis among users who are classified as unsecured creditors. Essentially, this means that users will receive a share of the available token assets associated with WazirX proportionate to their claims for account balances. This approach aims to create a fair distribution of assets among all affected users, thereby mitigating the financial fallout from the hack.

Investors and users of WazirX are undoubtedly concerned about the implications of these developments. As the exchange navigates this challenging period, transparency will be essential in rebuilding trust with its user base. The outcome of the court’s decision on the moratorium will play a crucial role in shaping the future of WazirX as it strives to recover from this substantial setback.

Conclusion

WazirX’s request for a six-month moratorium highlights the challenges faced by cryptocurrency exchanges in the wake of security breaches. As the legal proceedings unfold, the platform’s ability to effectively restructure and recover user assets will be critical. Stakeholders will closely monitor the situation, hoping for a resolution that protects user interests while allowing WazirX to emerge from this crisis stronger and more resilient.