WazirX receives extension to complete restructuring
WazirX wins court extension to revise restructuring plan after $234 million hack
WazirX, once India’s largest crypto exchange, has secured a critical extension from Singapore’s High Court as it scrambles to recover from a massive $234 million hack in July 2024.
The extension allows the exchange to present revised arguments supporting its restructuring plan and temporarily shields it from creditor lawsuits, reports CryptoSlate.
This court-supervised Scheme of Arrangement is WazirX’s last-ditch effort to reorganize operations and settle claims from over 400,000 affected users globally. Without this extension, the company faced imminent liquidation, which experts warn could drag on for years, incur heavy legal costs, and deliver lower recovery rates to users.
New Recovery Plan Involves Risky Tokenization Strategy
To stabilize the situation, WazirX has proposed shifting its core business to a new Panama-based entity, Zensui Corporation, distancing itself from parent company Zettai Pte Ltd. Central to the plan is the issuance of “recovery tokens” — blockchain-based IOUs that would eventually reimburse 75% to 80% of the stolen crypto, contingent on future market performance and platform revenue. While more than 93% of voting creditors approved this solution in April, many remain skeptical about the timeline and viability of the token-based recovery system. The Singapore High Court previously rejected the plan over concerns regarding transparency and governance, demanding stronger assurances before final approval.
User Confidence and Industry Trust Hang in the Balance
The court’s latest extension offers WazirX one final opportunity to prove its commitment to both regulators and its deeply frustrated user base. The exchange has emphasized its intention to meet the court’s requirements and promised timely updates, although no future hearing date has been set. For thousands of users who have been locked out of their accounts for nearly a year, the situation remains precarious, with the risk of repayments being delayed as far as 2030 if the plan fails. The case underscores the broader crisis of trust in the crypto industry, which has been battered by similar collapses like FTX and Zipmex. WazirX now faces a critical path to navigate: restoring customer confidence while securing judicial approval for its ambitious but fragile recovery plan.
Recently we wrote that after the $234 million hack of Indian crypto exchange WazirX in July 2024, users sought legal investigation through the Supreme Court. However, the court dismissed their petition, citing the lack of crypto regulation in the country.
