The parent company of WazirX, Zettai, filed a moratorium in the High Court of Singapore on August 27, announcing that it is currently in talks with 11 global cryptocurrency exchanges for capital support after hackers stole nearly half of its assets in a major cyber attack on July 18, 2024.
The moratorium provides much-needed breathing space for the platform, which faces customer criticism for failing to protect its crypto assets. According to Singaporean laws, an automatic 30-day moratorium is granted when an entity applies.
A few days ago, WazirX embarked on a complex restructuring process under the Singapore Scheme of Arrangement, which is legally binding.
“A Scheme, if approved by the creditors and sanctioned by the Singapore Court, would be legally binding on all relevant parties, including Zettai,” explained WazirX.
While the affidavit didn’t disclose the details of the crypto exchanges, Moneycontrol reports that WazirX has already signed Non-Disclosure Agreements (NDA) with at least three of the exchanges.
The moratorium also protects the platform from additional lawsuits that customers or other crypto exchanges may file, allowing the platform’s parent entity, Zettai, to focus on restructuring.
“We anticipate that under a planned restructuring, the impact from the cyberattack will be allocated pro-rata across users who rank equally with each other as unsecured creditors, and users will receive a share of available token assets associated with the Platform proportionate to their share of all users’ unsecured claims for their account balances,” writes WazirX.
Unsecured creditors have claims based on token balances but do not have rights to any specific tokens. If these creditors file a withdrawal claim, WazirX must transfer the corresponding amount to them, provided the platform has funds for this purpose. Essentially, this makes users contingent creditors, meaning their claims depend on the platform’s ability to fulfil them.
In layman’s terms, WazirX is trying to say that it is in no position to return the stolen assets to the users and that the only way to proceed is through the proposed restructuring plan.
Earlier, WazirX explained that the restructuring would involve rebalancing customer portfolios and allowing affected users to recover only 55% of their holdings. The remaining funds would be locked in USDT-equivalent tokens. Users did not take this announcement, and some even threatened a lawsuit against the platform.
WazirX further explained that the moratorium would be accompanied by attempts to recover stolen tokens and explore partnerships with third parties for capital infusion. The platform also warned that resolving crypto balances via alternative routes would be challenging if the restructuring didn’t go as planned.
The platform will hold a town hall on September 2 to explain the moratorium’s key features and restructuring scheme.
WazirX also said that the restructuring scheme, which will take about six months, is the fastest way to activate crypto withdrawals on the platform.
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