The recent financial troubles at WazirX have caused a stir among users, with many urgently withdrawing their Indian Rupee (INR) balances from the platform. After the unfreezing of 66 percent of users’ INR balances on August 26, there was initially a surge in withdrawals. However, this momentum has since slowed down. Co-founder Nischal Shetty advised users to retrieve their INR balances from the platform while financial restructuring efforts are underway.
On July 18, a multi-signature wallet belonging to WazirX fell victim to a massive hack, resulting in a loss of over $230 million (approximately Rs. 1,900 crore). This incident caused significant financial distress for WazirX users as the exchange decided to suspend trading, withdrawals, and deposit services. Currently, crypto withdrawals on the platform remain suspended, and 34 percent of users’ INR funds remain frozen pending the completion of the investigation.
Collaboration with Kroll for Financial Restructuring
In an effort to get its books back in order, WazirX has teamed up with a financial restructuring firm called Kroll in Singapore. Kroll director George Gwee mentioned that users may not be able to recover around 43 percent of their funds they had on WazirX. However, in the best-case scenario for funds recovery, users could obtain up to 57 percent of their WazirX deposits.
Legal Proceedings and Timeline for Recovery
WazirX has filed for a mortarium in a Singapore court to buy time to analyze its liabilities and reorganize its capital. It could take up to six months before a restructuring scheme is finalized by the exchange. The company has not provided a definite timeline for when crypto withdrawals will resume on the platform. Co-founder Nischal Shetty mentioned that the WazirX team has been in constant touch with relevant authorities for investigating the hack, but details of the ongoing investigations remain confidential.
The WazirX team has dodged questions related to its relation with Binance, calling details confidential. Binance had claimed in November 2019 that it had acquired WazirX, but former Binance CEO Changpeng Zhao later claimed that the transaction was never completed. WazirX, in turn, accused Binance of spreading false and misleading information against them in the market.
The financial troubles at WazirX have left users in a state of uncertainty regarding the recovery of their funds and the future of the platform. The collaboration with Kroll and legal proceedings in Singapore indicate that efforts are being made to restructure the exchange’s operations. However, the lack of a definite timeline for fund recovery and the controversy surrounding Binance’s acquisition claims add to the complexities of the situation. Users are advised to stay updated on the latest developments and proceed with caution when dealing with their funds on WazirX.
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