Users impacted by WazirX’s July cyberattack are preparing to take the cryptocurrency exchange to the National Consumer Disputes Redressal Commission, demanding a 100% restoration of their digital assets. Supreme Court lawyer Aman Rehaan Khan, representing the group, has confirmed that 31 affected users have come together to recover lost assets and demand accountability from WazirX and its India affiliate, Zanmai Labs.
This class action lawsuit is the third legal action that WazirX faces. The other two are a complaint by CoinSwitch’s Ashish Singhal and a lawsuit filed on October 18 by Javir Bains.
Khan clarified that the complaint will specifically target Zanmai Labs, which handles all cash deposits in India. This distinguishes it from Singapore-based Zettai Pte, WazirX’s parent company and token custodian.
Despite a moratorium granted to Zettai by a Singapore Court, affected users argue that Zanmai, with whom they agree, is accountable.
“Our clients believe WazirX, as custodian, owes a duty of care to return assets in full,” Khan told Financial Express, adding that users are not willing to accept partial compensation or pro-rata distribution due to the alleged negligence leading to the hack, which has also been confirmed by cyber security firm Cyvers.
Cyvers stated that the firm sent multiple warnings to WazirX, which were ignored. Had WazirX taken these warnings seriously and acted accordingly, hundreds of millions of dollars could have been saved.
After India’s biggest cryptocurrency hack, WazirX announced several steps to recover the assets, including launching a bounty program, talking with 11 cryptocurrency exchanges for capital infusion, heading towards legal restructuring, and forming a Committee of Creditors to oversee the restructuring process.
However, one of the most controversial steps that WazirX announced in late July was distributing the $234 million loss across its customer base. The company used jargon like ‘socialised loss strategy’ to gain legitimisation. In reality, however, the crypto exchange exercised control over the assets and allowed users to recover only 55% of their holdings.
WazirX, seeking to counter criticism, has been vocal about its commitment to transparency, releasing several affidavits and hosting multiple town halls to update users and address concerns. In one such town hall, it was revealed that WazirX’s crypto deposits and associated activities are under no entity as there’s a dispute between Zettai and Binance, a charge that Binance denies.
WazirX released 240,000 wallet addresses and Proof of Reserves (PoR) as part of the moratorium. However, on further investigation, researchers found several inconsistencies and errors in the wallets, and some also noticed WazirX’s shady transfers to ByBit and KuCoin.
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