Customers of WazirX, the Indian cryptocurrency exchange that fell victim to a $234 million hack in July, are facing grim prospects of recovering their funds in full.
According to George Gwee, a director at restructuring firm Kroll, which is working with WazirX, only 55-57% of customers’ funds may be recoverable in the best-case scenario. Gwee claimed that at least 43% of the funds held by customers are unlikely to be retrieved, TechCrunch reported.
Last week, WazirX sought a six-month protection order from a Singapore High Court as it attempts to restructure its liabilities. The company’s priority, under the restructuring plan, will be to distribute the remaining token assets to users on a pro-rata basis via cryptocurrency.
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WazirX to Share Profits With Customers
WazirX has also indicated that it is in discussions to share profits from its revenue-generating products with its customers. However, the company has yet to provide any concrete details regarding these potential profit-sharing arrangements.
The July hack, the largest cryptocurrency theft in India’s history, has sent shockwaves through the nation’s crypto community. Since the attack, WazirX has been scrambling to devise a plan to return funds to its customers.
The exchange had previously proposed socializing the “force majeure” loss in July, but the specifics of that plan remain unclear.
Watch this guys!
As Aman bhai said,"ye hack nhi hai, ye ek scam hai."
The way @NischalShetty and @WazirXIndia have handled this and handled the questions, it looks like a scam and not a hack! Just hope users can recover their funds 🙏 #WazirX https://t.co/YZhX9NrspW
— Guru Vedas (@VedasGuru) September 2, 2024
During the press conference, WazirX representatives mentioned ongoing discussions with an unnamed “white knight” investor, but clarified that no capital would be raised against equity due to an ongoing dispute with Binance, the world’s largest cryptocurrency exchange.
Binance and WazirX have had a complicated relationship. Binance announced the acquisition of WazirX in 2019, only to later dispute the claim and sever its technical ties with the Indian firm in 2022.
When asked about Binance’s ownership status, WazirX representatives declined to comment. They also dismissed the possibility of selling WazirX as part of the restructuring process.
Furthermore, when pressed about potential legal actions against Binance and Liminal, the multisignature wallet provider whose system was allegedly compromised during the hack, WazirX representatives offered no clear answers.
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CoinSwitch Sues WazirX For $9.7M
The situation is further complicated by legal pressure from CoinSwitch, another major Indian crypto exchange. Last week, CoinSwitch initiated legal action against WazirX in an attempt to recover approximately $9.7 million worth of assets that remain stuck on the platform.
Last month, CoinDCX launched a $6 million Crypto Investors Protection Fund (CIPF) to safeguard its users against potential security breaches after the cyber theft at WazirX.
CoinDCX’s investor protection fund aims to offer a safety net for investors, bolstering their confidence in the platform’s security. The initial corpus of $6 million for the CIPF comes directly from CoinDCX’s cash reserves.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
