WazirX files application for creditors’ meeting to present and vote on restructuring scheme

WazirX claimed that the move would help stabilise the exchange [File]
| Photo Credit: REUTERS

WazirX’s crypto operating entity Zettai said that it had filed an application with the Singapore High Court in order to carry out a creditors’ meeting where it could present and conduct a vote on the post-hack restructuring scheme.

WazirX claimed that its scheme of arrangement was aimed at providing quick and fair recoveries. If approved, initial distributions could take place within 10 business days (per WazirX’s definition of the same in the proposal) after the scheme becomes effective.

“Under the Scheme the net available liquid funds (after accounting for, among others, professional fees and other operational costs) which currently represent over 100% of the USD value of liabilities as on 18th July 2024, will be disbursed to Scheme Creditors in the proportionate token balances held in their portfolio, ensuring they benefit from the ongoing crypto bull run,” noted WazirX in a press release, adding that recovery tokens would also be given to users.

The scheme will have to be “approved by the requisite majority of the Scheme Creditors” and sanctioned by the court.

WazirX appeared to encourage investors to support the scheme for a more timely distribution of assets. It said that if the scheme was not approved, users would likely have to wait for the WazirX ownership dispute to be solved, which could result in “potentially extended timelines.”

WazirX and the international crypto exchange Binance are caught in a legal dispute over whether or not the latter company formally acquired the former. WazirX CEO Nischal Shetty said this was one reason why the company could not compensate users with its own profits after a multi-signature wallet hack on July that cost the platform over $230 million.

However, Binance refuted this claim and urged WazirX to take responsibility.

Binance’s former CEO Changpeng Zhao previously criticised the operation of WazirX and warned users to move their funds to Binance instead.

“Sorry to hear about what happened. I was in a US prison when that happened,” he responded on X on December 2 to a user who claimed that Zhao’s recommendation turned out to be correct.

The process of distributing recoveries to investors has been beset by complications due to the volatility of crypto and a lack of initial official reports regarding which crypto assets were specifically stolen by the hackers on July 18. There was also confusion regarding the structure of WazirX and the reason behind it choosing to push for restructuring in Singapore instead of India.

While some WazirX users are in favour of sharing out the losses, others do not believe that their non-stolen assets should be used to compensate others. Most are desperate to get back access to their locked up crypto funds before prices crash.

“Take an example: 1 BTC and 1 ETH with an exchange. User 1: Token balance of 1 BTC [.] User 2: Token balance of 1 ETH [.] 1 ETH stolen. Can you please explain how to restart the exchange for User 1 & 2 with the remaining 1 BTC?” Shetty questioned on X on December 7, while denying allegations that the platform had the money to compensate users.

He also denied using customers’ locked up funds for leverage trading, posting on X that such allegations were lies.