Customers of WazirX, the Indian cryptocurrency exchange that suffered a $234 million hack in July, are unlikely to fully recover their funds through the ongoing restructuring process, according to a company legal adviser.
George Gwee, a director at restructuring firm Kroll, which is assisting WazirX, disclosed on Monday that at least 43% of customers’ funds are unlikely to be recovered. WazirX has sought a six-month protection period from the Singapore High Court to restructure its liabilities. Gwee mentioned that the best-case scenario could see customers recovering between 55% and 57% of their funds.
As part of the restructuring plan, WazirX intends to distribute its remaining token assets to users on a pro-rata basis via cryptocurrency. The company is also exploring ways to share profits from its revenue-generating products, although it has not provided concrete details on how this would be achieved.
The July hack, the largest cryptocurrency theft in India’s history, has sent shockwaves through the country’s crypto industry, with WazirX scrambling to find ways to compensate its customers. The company initially proposed to socialize the “force majeure” loss in July.
During a press conference, WazirX representatives avoided addressing many questions regarding their efforts to secure additional capital. They mentioned ongoing talks with an unnamed investor but clarified that any capital raised would not be against equity, due to a longstanding dispute with Binance, the world’s largest cryptocurrency exchange. Binance and WazirX had been closely linked, with Binance announcing its acquisition of WazirX in late 2019. However, after a public dispute, Binance later denied owning the firm and terminated its tech offerings to WazirX in 2022.
When asked about Binance’s ownership of WazirX and the possibility of selling the company as part of the restructuring, WazirX representatives declined to comment, stating that a sale was not feasible.
There was also uncertainty about potential legal actions against Binance and Liminal, the multisignature wallet provider whose system was allegedly compromised during the hack. WazirX representatives did not provide a clear answer when questioned about this possibility.
Adding to WazirX’s challenges, another major Indian crypto exchange, CoinSwitch, initiated legal action last week to recover approximately $9.7 million worth of assets stuck on WazirX’s platform. Notably, WazirX counts Indian law enforcement agencies among its customers, further intensifying the pressure on the embattled exchange.
Related Topics:
