What is WazirX’s legal status after a $230 million wallet hack?
The Hindu
WazirX is reeling from a cyberattack that has nearly wiped out half the value of its exchange holdings.
The story so far: On August 26—more than a month after a cyberattack that cost Indian cryptocurrency exchange WazirX over $230 million in assets—CEO Nischal Shetty posted a screenshot of the Maha Mrityunjaya prayer on X, exhorting frustrated and fearful customers, “I’ve been reading this every morning which has helped me keep my mind focused on solving the problem”.
The platform, once claimed to be India’s largest cryptocurrency exchange by volume, is reeling from the ramifications of a cyberattack that has nearly wiped out half the value of its exchange holdings.
On July 18, a multi-signature wallet belonging to WazirX, and managed with the services of a digital asset custody company called Liminal, was exploited. This led to the loss of more than $230 million in assets. For reference, WazirX reported in early June that its total holdings was at USDT 503.64 million (₹4,203.88 crores). Going by that number (updated ones are yet to be released), the company lost over 40% of its holdings.
Both WazirX and Liminal are blaming each other for security failures, while claiming that their actual platforms were not hacked. WazirX has been slow in providing updates about the perpetrators (who are still unknown) and its live proof-of-reserves, much to its customers’ distress.
After days of making users wait without any specific updates, WazirX said it would be pursuing a “Singapore Scheme of Arrangement.” In other words, WazirX’s leadership will put forward a debt restructuring proposal that users should be able to vote on and approve, which will then be court-sanctioned.
This announcement triggered confusion and anger, as users were not given a clear timeline on the restructuring plan and how much say they will have over the future of their locked-up funds. Many were perplexed about why the Indian exchange was taking the matter to a foreign court.
Apart from this, WazirX said all trades conducted after the exchange’s withdrawal freeze would be undone.
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