Court Approves WazirX Restructuring Plan, Paving Way For Repayments After $234M Hack
A Singapore High Court has approved a restructuring plan for crypto exchange WazirX, clearing the way for the company to start user repayments following a $234 hack million last year.
The decision will allow users to recover up to 55% of the funds that they lost in the hack.
That decision by the court also comes weeks after creditors backed a revised proposal for the restructuring. After securing both of these approvals, WazirX can now start the next phase of its recovery process, which includes token-based fund distributions and reviving the exchange’s operations.
WazirX One Step Closer To Returning Funds To Over 149K Users
WazirX lost $234 million to hackers when the bad actors gained access to the exchange’s Safe Multisig wallet in July 2024. Following the incident, the platform was forced to pause withdrawals.
In the weeks that followed, the attack had been linked to North Korean hackers, with analysts observing that some of the techniques used to hack the platform were similar to those used by the Lazarus Group.
Hack victims were then presented with two options. The first was to accept a restructuring plan and recover just half of their assets quickly, while the other plan was to pursue full liquidation. This second option was expected to take between three to five years. It also offered no guarantee of higher payouts.
WazirX creditors had then approved a restructuring plan, but the Singapore High Court rejected the initial proposal due to concerns over regulation around the exchange’s proposed recovery token plans.
In response to the court’s rejection, WazirX revised its plan. With the new version, the exchange proposed that repayments be routed through its Indian entity, Zanmai Labs, which is registered with the country’s Financial Intelligence Unit.
The updated proposal gained even stronger approval from creditors during the second vote that was held between July 30 and Aug. 6.This process will also be limited to users who held positive account balances as of July 18, 2024.
Now, with the recent approval, the exchange is one step closer to distributing funds to the impacted account holders whose claims have been validated by the company. Due to the fact that the repayments will be made in dollar values pegged to prices in July 2024, customers will miss out on the gains from the latest crypto bull run that has seen Bitcoin and other tokens soar.
Total crypto market cap (Source: TradingView)
Repayment Timelines Vary
While WazirX users are now a step closer to seeing their funds returned, there is still some uncertainty around how long the repayments will take.
WazirX founder Nischal Shetty said on Aug. 20 that the exchange would be revived and users would get their funds within ten days of the court’s approval and the scheme taking effect.
Meanwhile, George Gwee, a director at the restructuring firm Kroll that is working with WazirX, said that users may need to wait around two to three months after the court’s approval before they can receive their funds.
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