WazirX, a prominent Indian crypto exchange, is currently grappling with the aftermath of the $230 million hack on July 18, 2024. The exchange, owned by Singapore-based Zettai Pte Ltd, has filed an application with the High Court of Singapore for a moratorium. The crypto exchange now seeks the court to facilitate its efforts to restructure its liabilities under a scheme of arrangement.
Users Affected In WazirX Hack Concerned Over Moratorium Rejection
The above-mentioned moratorium, if granted, would provide Zettai with the necessary “breathing space” to address users’ crypto balances. However, the key question on the minds of WazirX users is what will happen if the Singapore court rejects the moratorium application. According to WazirX’s recent communication to its community, the consequences could have a negative impact.
They explained, “If the moratorium is not granted, the chances of successful restructuring decrease significantly. Users may have to wait until the dispute with Binance is resolved, as Zettai holds the cryptocurrency tokens under protest.”
👋🏻 Tribe! Let’s dive into another important question from the community:
Q: What happens if the moratorium is not granted?
A: If the moratorium is not granted, the chances of successful restructuring decrease significantly. Users may have to wait until the dispute with Binance… pic.twitter.com/8K5CfWWiOE
— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) September 13, 2024
Moreover, the ongoing dispute between Zettai and Binance further complicates matters amid the WazirX hack fiasco. Although the specifics of the dispute remain confidential, it concerns the ownership of the WazirX platform and its assets. If the court denies the moratorium, users will likely have to wait until the resolution of this legal dispute before any clarity emerges regarding ownership and liability for the stolen assets.
Meanwhile, Zettai is proposing a scheme of arrangement as part of its restructuring plan. This scheme offers a potential lifeline for users, allowing them to recover a portion of their crypto balances more quickly than through other legal avenues. Additionally, WazirX emphasized the benefits of the scheme in its recent update.
They stated, “A scheme of arrangement provides an avenue for the Platform’s users to more quickly receive a distribution from the Platform’s assets in proportion to the share of their claims associated with their cryptocurrency balances.”
Under the proposed scheme, users would be treated as contingent unsecured creditors of Zettai. Hence, they will receive distributions of available token assets proportional to their claims. This would be accompanied by mechanisms aimed at increasing the token recoveries. These include the tracing and recovery of stolen tokens in the WazirX hack and potential revenue-generating products or partnerships.
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Exchange Spotlights ‘Undefined Risks’
If the court grants the moratorium, Zettai would have a window of at least six months to work with stakeholders on the terms of its restructuring plan. This plan would allow for a fair and legally binding distribution of assets to users. However, if the moratorium is denied, the restructuring process would become much more uncertain.
WazirX warned that without the moratorium, resolving crypto balances could involve “undefined risks and timelines,” leaving users in a prolonged state of uncertainty. However, regardless of the court’s decision, users will still have an unsecured claim against either Binance or Zettai. Nonetheless, the claims will depend on the outcome of the ownership dispute. If Binance is ruled as the owner of WazirX, it would bear the responsibility for users’ account balances. Conversely, if Zettai retains ownership, the liability falls on them.
WazirX has urged its users to support the moratorium, arguing that it is the most efficient and cost-effective way to resolve the current crisis. Also, the exchange acknowledged that the process could take longer than some users anticipated, but reiterated that it offers the best chance for a satisfactory outcome. Meanwhile, the hearing date for the moratorium application is yet to be scheduled. This has left users affected in the WazirX hack anxiously awaiting the court’s decision.
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