WazirX Granted Four-Month Conditional Moratorium by Singapore Court

Highlights:

• WazirX was granted a four-month conditional moratorium from the Singapore Court to manage its liabilities after the $230 million hack.
• The moratorium requires WazirX to disclose wallet addresses, financial records, and respond to user queries within six weeks.
• The hacker laundered most of the stolen funds through Tornado Cash, making recovery challenging for WazirX users.

WazirX, an Indian cryptocurrency exchange, has been granted a four-month conditional moratorium by a Singapore High Court. This comes after the platform suffered a significant hack in July, resulting in a loss of $234 million. The moratorium, initially requested for six months, was granted for a shorter period, providing WazirX with much-needed time to restructure its business.

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The hack, which compromised about 45% of customer funds, has left the exchange in a vulnerable position. Consequently, the court’s decision will help WazirX address its liabilities and obligations to customers and creditors.

📢 WazirX Granted Four-Month Moratorium by Singapore Courts

In a crucial decision, the Singapore courts have granted WazirX a four-month moratorium, affirming the company's compliance with the legal and procedural requirements under Section 64 of the IRDA. This decisive court… pic.twitter.com/FGWBlSNmWM

— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) September 26, 2024

Conditions of the Moratorium

Under the terms of the moratorium, WazirX must adhere to several key conditions. These include disclosing the addresses of its cryptocurrency wallets via a court affidavit, publishing its financial books of accounts within six weeks, and responding promptly to user queries raised in court. Furthermore, any future voting on the exchange’s operations must take place on an independent platform and be scrutinized by third parties to ensure transparency.

In its statement, WazirX expressed gratitude for the court’s decision. The company noted that the moratorium would allow it to focus on recovering and restructuring its business.

Nischal Shetty, founder of WazirX in a post on X said:

“Our immediate filing for the moratorium was a decisive step to ensure the fastest, fairest, creditor-approved, and legally binding path to resolution.” 

Customer Compensation Plans

Following the hack, WazirX has been working with various global crypto exchanges for capital infusion and support. The exchange has signed non-disclosure agreements with at least three exchanges to aid in its recovery efforts. Additionally, an independent audit by Grant Thornton cleared Liminal Custody, a cryptocurrency custody provider, of any involvement in the breach. The audit confirmed that the breach occurred outside of Liminal’s systems, reinforcing WazirX’s efforts to identify and secure any vulnerabilities.

WazirX is actively working to recover at least 55% of customer funds affected by the hack. The exchange revealed that it requires only 45% of available funds for restructuring costs. The firm is exploring additional revenue-generating products and mechanisms that could help share profits with its customers.

Meanwhile, ongoing investigations into the hack have shown that the attacker has been moving the stolen funds through the crypto mixer Tornado Cash. Reports suggest that the hacker has laundered a majority of the stolen Ethereum, making it challenging for authorities to recover the funds. However, WazirX has remained committed to finding a resolution despite the complexities involved.

This laundering activity makes it increasingly difficult for authorities to track and recover the stolen assets. Blockchain analysis firms have linked the attack to the North Korean Lazarus Group, a notorious state-sponsored hacking organization known for high-profile exploits in the cryptocurrency space.

The Road Ahead for WazirX

Moving forward, WazirX must comply with the court’s conditions while it seeks approval from its creditors for a restructuring plan. The exchange is scheduled to hold a creditors’ meeting, where its proposed recovery strategy will be discussed. If the proposal secures the required votes, WazirX could move forward with reimbursing 55% of the affected customer funds.

While the hacker behind the breach remains unidentified, WazirX has been actively cooperating with authorities and continues to explore legal avenues to recover the stolen funds. The exchange’s future now hinges on meeting the court-imposed deadlines and successfully implementing its restructuring plans.

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