WazirX Seeks Moratorium in Singapore Court Amid Restructuring Efforts Following $230M Hack
In a significant development for the cryptocurrency industry in Asia, Indian crypto exchange WazirX has taken legal action in Singapore to address the fallout from a major cyber attack that occurred in July 2024. The exchange’s parent company, Zettai Pte Ltd, filed an application for a moratorium with the High Court of Singapore on August 27, 2024, under the Insolvency, Restructuring and Dissolution Act 2018.
The move comes in the wake of a devastating hack that resulted in the theft of approximately $230 million worth of cryptocurrency assets, primarily affecting Ethereum-based ERC-20 tokens stored in WazirX’s hot wallets. The cyber attack, which took place on July 18, 2024, forced the exchange to suspend all withdrawals, leaving users unable to access their funds and sparking widespread concern within the crypto community.
The moratorium application aims to provide WazirX with a 30-day “breathing space” to progress with a restructuring plan. This plan represents what the company believes to be the most efficient way to address users’ cryptocurrency balances on the platform and facilitate recovery for affected users. If granted, the moratorium would protect Zettai from potential creditor enforcement actions, such as winding-up proceedings and security enforcement.
Under the proposed restructuring scheme, WazirX anticipates allocating the impact of the cyberattack pro-rata across users who rank equally as unsecured creditors. This means users would receive a share of available token assets associated with the platform proportionate to their share of all users’ unsecured claims for their account balances.
However, the situation is further complicated by an ongoing dispute between Zettai and Binance, subject to confidentiality obligations. Despite this, Zettai has taken the initiative to concurrently facilitate a solution for users of the platform as quickly and effectively as possible.
In a related development, rival crypto exchange CoinSwitch has announced its intention to pursue legal action against WazirX over funds stuck on the platform following the cyber attack. CoinSwitch claims to have approximately $9.7 million worth of assets on WazirX, including both fiat and various cryptocurrencies.
WazirX has stated that it needs at least six months to consider the terms of the restructuring plan and work with relevant stakeholders. The company plans to hold a town hall via video conference in early September to explain the key features of the moratorium and the proposed scheme of arrangement, as well as to address user questions.
As the cryptocurrency industry continues to grapple with security challenges, the outcome of WazirX’s restructuring efforts and legal proceedings will be closely watched by market participants and regulators alike. The case highlights the ongoing risks associated with cryptocurrency exchanges and the need for robust security measures in the rapidly evolving digital asset landscape.
