WazirX, a cryptocurrency exchange embroiled in a scandal following a significant hacking incident, has been granted a court extension to revise its restructuring plan.
After the Hack: Rebuilding Under Regulatory Scrutiny
In July 2024, WazirX fell victim to a hacking attack that resulted in the theft of $234 million. This incident drew attention to existing technical weaknesses of the platform and revealed internal issues, including user dissatisfaction and disagreements with parent company Zettai Pte Ltd. Furthermore, global regulators began to scrutinize asset transparency and recovery processes.
New Corporate Structure and Recovery Token Plan
WazirX's revised plan involves transferring its core operations to a new Panama-based entity called Zensui Corporation, aiming to separate the platform from Zettai’s legal issues. A key component of the plan is the issuance of recovery tokens that will represent unrecovered user balances. These tokens aim to cover 75% to 80% of the lost funds, with actual payouts dependent on WazirX’s future revenue and overall market performance. Despite over 93% of creditors voting in favor of the plan, users express skepticism regarding its feasibility and liquidity.
Does Liquidation Still Loom?
The High Court's rejection of the initial plan created an immediate need for revisions. Without a finalized and approved plan, WazirX is at risk of liquidation. Legal experts assert that a court-ordered wind-down could take years and may result in lower recovery rates for users and creditors. In the worst-case scenario, repayments to users could be delayed until 2030.
The court extension is seen as WazirX's last chance to restore trust among users and regulators. However, the success of the restructuring plan will depend on transparency, implementation, and the court's ruling. Thousands of users are still unable to access their funds, and for them, the extension represents a glimmer of hope in an otherwise long and uncertain process.
