Following a major hack that compromised WazirX’s security, the cryptocurrency exchange recently held a webinar on September 25, 2024, to address user concerns regarding their funds. The incident, which resulted in a staggering loss of approximately $234 million in user assets, has raised serious doubts about the future of investments on the platform and its operational transparency.
During the webinar, numerous users voiced their apprehensions regarding the status of their funds and when they could expect to withdraw their remaining balances. A significant point of contention arose from allegations that WazirX, along with its partners Zettai and Nischal, had used 100 crores of user funds for legal expenses, despite claiming to maintain a 1:1 proof of reserves.
In response to a direct inquiry about the timeline for withdrawals, WazirX officials clarified that users would only be able to access their funds once a restructuring proposal—referred to as a Scheme—received approval from creditors and was sanctioned by the High Court of Singapore. This process is anticipated to take at least six months, during which time trading will remain suspended.
Users expressed frustration over their blocked investments and the inability to access their funds after switching platforms. WazirX emphasized that the approval of the restructuring plan is crucial before any withdrawals can commence. Zettai, the entity managing WazirX, is expected to facilitate withdrawals in accordance with the finalized terms once the restructuring process concludes.
Concerns have also been raised by users alleging that WazirX is concealing its financial situation while having the means to repay its customers. Comparisons have been drawn to other exchanges, such as BingX, which have successfully navigated similar crises.
As of July 18, 2024, WazirX reported that Zettai faces liabilities totaling $546.5 million and an asset deficit of 45%, with available assets covering only 55% of these liabilities, primarily owed to customers.
The ongoing discussion also touched on the authorization for utilizing user funds, highlighting persistent accountability concerns. It was clarified that the costs incurred during the restructuring process encompass operational expenses, legal proceedings, and investigative efforts aimed at recovering stolen assets. These expenditures are deemed essential to maintain the platform’s functionality, facilitate the restructuring voting process, and enhance user recoveries through revenue-generating initiatives. Additionally, Zettai is actively pursuing rescue financing from potential partners to address these financial obligations.
Another user raised questions regarding WazirX’s capacity to control cryptocurrency assets while users remain unable to withdraw their funds. Officials explained that WazirX operates through Zanmai Labs for INR transactions, while Binance managed the crypto operations until January 2023. After Binance halted its services, Zettai Pte Ltd, based in Singapore, took partial control of the crypto assets, although it does not fully manage deposits and is currently disputing Binance’s termination.
When asked about WazirX’s policy allowing large withdrawals after the cyberattack while restricting Indian users from accessing their crypto, the response clarified, “Please note that assets were stolen via a cyberattack, not via a withdrawal from a user.”
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