Cryptocurrency exchange WazirX completes asset restructuring on platform

Crypto exchange WazirX said on Monday that it has completed its asset restructuring process, following which a scheme would be put to user vote — nearly seven months after an alleged security breach impacted the platform leading to a loss of over $230 million.

 

The redistribution of assets will be made in the form of tokens, the company said, conditional to its users voting in affirmative to its scheme. 

 

The scheme would represent about 85 per cent of the balances of investors on the crypto exchange, valued as of July 18, 2024 at 1 PM Indian Standard Time (IST). This was the day when the firm was impacted by the alleged breach. 

 

It added that subsequent distributions would happen over the next three years from illiquid assets such as stolen tokens and those from shared profits generated during future operations. 

 

“These future distributions will be made through the purchase of recovery tokens issued to scheme creditors,” WazirX said in a statement. 

 

A majority vote representing 75 per cent of the scheme’s creditors by value would be required to approve the scheme. Once approved, the company will make an application to the court for its sanction.

 

Asset restructuring refers to the reallocation and reorganisation of virtual digital assets to the impacted users or investors.  

 

The platform has 4.3 million creditors in total. Creditors are the investors and users affected by the cyberattack.

 

“By targeting one of the fastest distribution timelines in the crypto industry, we hope to set a precedent for accountability, efficiency, and resilience in times of crisis,” said Nischal Shetty, founder, WazirX. 

 

In December, Zettai, the parent firm of the embattled crypto exchange, filed an application with the Singapore High Court seeking permission to convene a meeting of its creditors.

 

The meeting would enable the company to present a scheme of arrangement for the recovery of lost funds to its creditors and bring it to vote, subject to the court’s approval.

 

As part of the scheme of arrangement, creditors will receive an initial distribution of the available liquid assets within 10 business days of the scheme becoming effective. Creditors will also receive recovery tokens, enabling them to redeem these as part of the company’s recovery efforts.

 

WazirX had applied for restructuring at a Singapore court on August 23. The company, facing liabilities amounting to $546.5 million, had a user base of over 16 million investors.

 

A Singapore court had granted a four-month moratorium to the company in September — a period designated for restructuring its businesses without worrying about legal proceedings.