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WazirX Customers Face Slim Chances of Full Recovery Following $234M Hack

Writer's picture: Blockonome GnomeBlockonome Gnome

Legal advisers indicate that WazirX customers are unlikely to be fully reimbursed in crypto terms, with recovery prospects hinging on market improvements and potential external support.


WazirX Customers Face Slim Chances of Full Recovery Following $234M Hack

WazirX, the cryptocurrency exchange that suffered a devastating $234 million hack in July, is facing grim prospects for its customers, who are unlikely to be fully reimbursed in cryptocurrency, according to legal advisers. During a recent conference call, legal experts and WazirX co-founder Nischal Shetty discussed the ongoing challenges in recovering the stolen funds and the potential impact on customers.


According to George Gwee, a director at the restructuring firm Kroll, customers are expected to recover only 55% to 57% of their funds at best. The exchange lost approximately 45% of its customers' assets in the cyberattack, and the path to recovery remains fraught with uncertainty. Gwee emphasized that it is "extremely unlikely" that customers will be made whole in cryptocurrency terms, with any possible recovery depending on market conditions and the success of ongoing negotiations.


On Tuesday, the Singapore High Court will consider WazirX's request for a six-month protection period to restructure its liabilities. The request was made by Zettai, the Singapore-incorporated entity whose subsidiary, Zanmai India, operates WazirX. This protection period is seen as crucial for the exchange to stabilize its operations and explore options for recovery.


Nischal Shetty acknowledged the challenges, noting that the figures provided are current as of Monday and that efforts are ongoing to minimize the gap between lost and recoverable funds. "Over the next several weeks, it will be easier and clearer on each stage where we can fill the gap," Shetty stated.


Jason Kardachi, managing director at Kroll, added that while there are potential avenues for improving recovery—such as the intervention of a "white knight" or the successful recovery of stolen funds—customers should not expect to be fully reimbursed in crypto. He emphasized that any improvements would likely only be in U.S. dollar terms, rather than in the original cryptocurrency.


The legal and financial uncertainty is further compounded by an ongoing ownership dispute between WazirX and Binance, the world's largest cryptocurrency exchange. Although Shetty and his legal team declined to provide details due to confidentiality agreements, Kardachi mentioned that approximately 55% of customer funds could be made available before the ownership dispute is resolved.


The WazirX hack has highlighted the vulnerabilities within the crypto exchange sector, underscoring the importance of robust security measures and transparent recovery plans. As the exchange navigates this challenging period, customers are left in a state of uncertainty, hoping for the best but preparing for a significant loss.


photo source / Blockonome

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Blockonome's content is meant to be informational in nature and should not be interpreted as investment advice. Trading, buying or selling cryptocurrencies should be considered a high-risk investment and every reader is advised to do their own research before making any decisions.

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