Court Orders WazirX To Disclose Wallets Amid 4-Month Moratorium

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As a seasoned crypto investor with scars from more hacks than I care to remember, the news about WazirX being ordered to disclose its wallet addresses by a Singapore High Court brings a mix of emotions. Relief, because it’s a step towards transparency and accountability that the industry desperately needs. But also apprehension, as I’ve learned time and again that such revelations can often lead to more questions than answers.

In simple terms, the Singapore High Court has instructed the WazirX Exchange to reveal its wallet addresses as part of the requirements for a four-month moratorium it granted. This decision facilitates the development of a restructuring plan to refund affected customers, as about 45% of users’ funds were lost due to a $230 million hack on the exchange.

Court Orders WazirX To Disclose Wallets

The court mandated WazirX to disclose its wallet addresses through a sworn statement within three weeks following the moratorium ruling. This affidavit should include information about the compromised wallets and the remaining balances in their operational wallets. Furthermore, they have three weeks to address user inquiries on the court’s discussion platform.

In summary, within six weeks, the crypto exchange is required to submit its most recent financial reports (management accounts and balance sheet) in the form of an affidavit. An external party will supervise future restructuring votes, and a creditor committee will be established as part of the agreement terms.

If WazirX requires additional time to finish the restructuring process, they should submit a request for extension at least three weeks prior to the moratorium order’s deadline.

This court order temporarily halts any repayments that the exchange was supposed to make to its shareholders, offering a short-term respite for the exchange. On August 27, WazirX petitioned the High Court of Singapore for a six-month moratorium under the Insolvency, Restructuring and Dissolution Act; however, the court only approved four months.

Nischal Shetty, WazirX’s founder, expressed gratitude for the court’s verdict, stating it enables them to concentrate on their journey towards resolution, recovery, and restructuring. In a press release, he explained that their prompt request for a moratorium was a strategic move aimed at providing the quickest, creditor-approved, legally binding route to resolution. This path allows creditors some choice and potential benefits during a market upturn.

On July 18, WazirX was targeted by a hacker who made off with approximately $230 million in cryptocurrency. Regrettably, cyber attacks on crypto exchanges remain a persistent issue. Not long ago, BingX also fell victim to a hack, resulting in the theft of around $43 million in USDT and USDC.

How The Scheme Of Arrangement Will Work

The plan includes WazirX negotiating a settlement with their creditors, where they commit to returning the owed funds within an agreed timeframe. It’s been disclosed that they have been actively collaborating with their advisers and shareholders to create a detailed strategy addressing concerns of all parties.

The crypto exchange has stated that all impacted users will be treated equally as unsecured creditors and given a portion of the tokens stored in the exchange’s reserves. WazirX further explained that they will distribute these funds based on each user’s share of the total unsecured claims, which are determined by their account balances.

To enhance their restructuring strategy, the Indian crypto exchange intends to establish systems aimed at boosting token recoveries. Additionally, they plan to create income-yielding products, profit-distribution mechanisms, and evaluate prospective collaborations with external parties for mutual benefit. Ultimately, these steps aim to compensate users financially and restore their losses.

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2024-09-26 13:10