WazirX’s Moratorium Plan Faces Backlash, Backed by Just 441 Users

WazirX, which suffered a loss of over $230 million (approximately Rs. 1,900 crore) in a hack in July, is now working to restructure its finances. In a recent affidavit, the exchange revealed that only 441 users have supported the moratorium appeal filed by its majority stakeholder, Zettai, in a Singapore court. With two million monthly active users, according to data shared with Gadgets360, this means just 0.02 percent of WazirX’s user base has backed the steps taken toward finalising a restructuring and compensation plan.

A moratorium appeal essentially buys one month of breathing time for the applying entity, but can be extended. In August, when Zettai filed the appeal in Singapore, the WazirX team issued its first affidavit, informing users that it could take up to six months to finalize a financial reorganization plan, including steps to assist users in recovering their funds.

This week, WazirX issued its second affidavit, revealing recent communication details with its users.

“As of the morning of 9 September 2024, Zettai received more than 1700 emails from the platform’s users in connection with the moratorium application and is in the process of verifying the support received. Of the 500 emails verified to date, 431 are in support, representing liabilities amounting to about $9,200,000 (roughly Rs. 77.2 crore) in value,” the affidavit viewed by Gadgets360 said.

Nischal Shetty, the co-founder of WazirX and director of Zettai, has been posting updates related to the proceedings on X. On August 28, Shetty announced that he personally filed the 52-page first affidavit, presenting the situation directly to WazirX’s community members.

“One key factor in our timeline for restructuring is how quickly we can all come together and agree on a path forward. We need to be united in this effort. Your support and collaboration are crucial to making this happen,” Shetty had said.

The latest developments suggest that the majority of WazirX users have not supported its restructuring efforts. Meanwhile, members of India’s crypto community are urging others to file scam reports against WazirX with Singapore’s financial authorities.

On July 18, a multi-signature wallet belonging to WazirX, which was under the oversight of Liminal Custody, was hacked, resulting in a loss of over $230 million (approximately Rs. 1,900 crore) and leaving users in distress. Currently, crypto withdrawals on the platform remain suspended. While 34 percent of users’ INR funds remain frozen pending the completion of the investigation, the remaining 66 percent of INR funds can be withdrawn by the users.

A WazirX spokesperson stated that 4.4 million of the total registered user base of 16 million have crypto balances on the platform. According to its second affidavit, the total number of individual platform users is over 4.2 million, and there are 617 corporate platform users. The claim amount for these users, as per the document, exceeds $546 million (roughly Rs. 4,585 crore). Gadgets360 has reached out to the exchange for an official explanation of this figure, and a response is awaited.

In a recent virtual town hall meeting with the media, Shetty and other members of the WazirX team stated that unless a white knight investor decides to provide a fund infusion, the company’s six-month timeline for financial restructuring will remain in place.

The company has partnered with Singapore-based financial restructuring firm Kroll for assistance.