WazirX Creditors Face Crucial Vote: Recover Funds by 2025 or Wait Until 2030

The fallout from India’s largest crypto hack sparks tough decisions for creditors.

Creditors of WazirX, once India’s leading cryptocurrency exchange, are approaching a pivotal moment. In the aftermath of a devastating $230 million hack in July 2024, creditors will soon vote on a restructuring scheme that could determine whether they start recovering their stolen assets as early as April 2025—or face a prolonged wait until 2030.

The proposed scheme, approved by a Singapore court earlier this year, requires more than 75% of voting creditors by value to give the green light. If passed, WazirX plans to resume trading operations, with initial payouts promised within 10 business days after the scheme’s activation. This includes the distribution of net liquid assets to affected users.

WazirX’s recovery strategy isn’t limited to just asset redistribution. The exchange aims to launch a decentralized exchange (DEX), issue recovery tokens that can be actively traded, and conduct periodic buybacks of these tokens using profits from new revenue streams. This multifaceted approach is designed to restore both user confidence and financial stability.

However, if creditors reject the restructuring plan, the company will be forced into liquidation under Section 301 of Singapore’s Companies Act. This process is expected to be far less favorable, potentially leading to a fire sale of assets at significantly reduced values. Creditors could face lengthy delays and diminished returns, with final payouts potentially not arriving until 2030.

The stakes are high, not just for creditors but for the broader crypto community observing how WazirX navigates this crisis. The exchange was hacked by the notorious North Korean cybercrime group Lazarus, which successfully siphoned over $230 million in user funds. The stolen assets were laundered through Tornado Cash, a crypto mixer designed to obscure transaction trails, complicating recovery efforts and dampening hopes for full restitution.

Since the hack, WazirX has faced intense scrutiny for its handling of the breach, particularly concerning its communication with users and the pace of recovery efforts. Despite these challenges, the company managed to secure a moratorium in Singapore, allowing it to propose the current restructuring plan as an alternative to complete liquidation.

The outcome of the upcoming vote will be crucial. A ‘yes’ vote could mark the beginning of a new chapter for WazirX, with trading resuming and recovery efforts gaining momentum. Conversely, a ‘no’ vote could plunge the exchange into a lengthy and uncertain liquidation process, leaving creditors with significantly reduced recoveries.

For now, the crypto world watches closely as WazirX’s creditors prepare to decide their financial futures, balancing the promise of quicker, albeit partial, recoveries against the risks of protracted delays and potential losses in a drawn-out liquidation.

photo source / Blockonome