Synopsis
The court’s decision followed WazirX’s request for a six-month moratorium under Section 64 of the Insolvency, Restructuring, and Dissolution Act (IRDA). However, the court granted a shorter, four-month period.
A Singapore court has granted cryptocurrency exchange WazirX a four-month conditional moratorium. This ruling provides the embattled exchange with temporary relief, allowing it to focus on resolving the aftermath of a major hack that led to the loss of over $230 million, about 45% of customers’ funds.
The court’s decision followed WazirX’s request for a six-month moratorium under Section 64 of the Insolvency, Restructuring, and Dissolution Act (IRDA). However, the court granted a shorter, four-month period.
The moratorium comes with several key conditions designed to maintain transparency and restore confidence among creditors and users. WazirX must publicly disclose wallet addresses via a court affidavit, respond to user queries raised during court proceedings, release its financial information, including its books of accounts, within six weeks, and ensure that future voting on court applications is conducted through an independent platform, scrutinized by third parties.
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View Details »Meanwhile, the court acknowledged WazirX’s proactive steps, including its prompt filing for the moratorium. This move aims to facilitate the fastest, creditor-approved, and legally binding resolution to restore users’ crypto balances. “We are working diligently with our advisors and stakeholders to develop a comprehensive plan that addresses the needs of all involved parties. WazirX appreciates the court’s trust and confidence in our actions,” the company said.
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“We are thankful for the court’s decision, which allows us to focus on our path to resolution, recovery, and restructuring,” said Nischal Shetty, Founder of WazirX. “Our immediate filing for the moratorium was a decisive step to ensure the fastest, fairest, creditor-approved, legally binding path to resolution, where creditors have a token choice and potential upside in a bull run.”
The court’s decision follows a massive security breach in July 2024, which resulted in WazirX losing over $230 million in customer funds. The hacker responsible has reportedly nearly completed laundering the stolen funds using Tornado Cash to obscure transactions. Despite these challenges, the court acknowledged that WazirX acted in good faith by seeking the moratorium.
However, WazirX’s legal advisers have cautioned that customers may not fully recover their funds, especially in cryptocurrency terms, raising concerns about the extent of recovery for affected users. During the court proceedings, the judge asked WazirX’s representatives to consider revealing any additional assets beyond the crypto tokens currently held by the exchange, further emphasizing the importance of transparency in the process.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of the Economic Times.)
