WazirX News – WazirX to Establish Creditors Committee Following $234 Million Crypto Hack

WazirX News – WazirX Hack: Exchange to Form Creditors Committee to Tackle $234M Loss

WazirX News – WazirX, one of India’s largest cryptocurrency exchanges, has announced its intention to form a Committee of Creditors (CoC) by October 9, as part of an ongoing effort to restructure its liabilities. The move comes after the platform suffered a $234 million hack, leaving millions of Indian users with significant financial losses.

Committee of Creditors to Advise on Restructuring

The 10-member Committee of Creditors will consist of users who were directly affected by the hack. In a blog post, WazirX stated that the CoC will provide feedback and advice on the exchange’s restructuring plan, though the committee’s role will be primarily consultative.

This development follows a Singapore court’s decision to grant WazirX a four-month conditional moratorium to allow the exchange time to reorganize its finances. During a recent town hall meeting, WazirX’s legal team revealed that customers are expected to recover only 55-57% of their funds, even after the restructuring.

Fair Representation of Creditors

According to WazirX, the CoC will aim to represent the broader creditor base. While the CoC will have voting rights on restructuring matters, the exchange is not obligated to implement the committee’s recommendations. WazirX plans to ensure that all creditors are fairly represented by segmenting them based on the value of their claims.

WazirX explained that it will establish a “Contingent Creditor Pool” by organizing creditors into 10 tranches based on the value of their claims. Each tranche will represent 10% of the total claims, which amount to $546.5 million. From each tranche, 1% of creditors will be randomly selected to join the Contingent Creditor Pool, resulting in the participation of approximately 43,000 creditors.

Affected Users to Play a Key Role

Users who are randomly selected for the Contingent Creditor Pool will have the option to volunteer to be part of the CoC or reject their selection. This selection process is designed to ensure that even creditors with smaller claims have a fair chance of being represented.

The $234 Million Hack and its Aftermath

In July 2024, WazirX suffered a major security breach when one of its multisig wallets was hacked, resulting in the loss of digital assets valued at over $230 million. These stolen funds represent 45% of WazirX’s total reserves, leading the exchange to initiate a comprehensive restructuring plan to address its liabilities.

WazirX founder Nischal Shetty has attempted to shift blame for the hack onto several parties, while denying any personal responsibility for the breach. Initially, Shetty pointed to Liminal, a custody wallet platform, accusing it of security lapses. Liminal, however, denied these accusations.

Dispute Between WazirX and Binance

In August 2024, Shetty accused Binance of holding a majority of Zettai Labs’ funds, the parent company of WazirX. Binance rejected Shetty’s claims and accused him of falsely implicating the exchange in the hack. This public dispute has further complicated WazirX’s efforts to regain customer trust and restructure its operations.

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