Nischal Shetty, founder of Indian crypto exchange WazirX has announced the formation of a creditors’ committee in response to the devastating $230 million hack that occurred on the platform. The announcement follows a recent ruling by the Singapore High Court, which granted the exchange a four-month moratorium to devise a restructuring plan aimed at repaying affected customers.
WazirX Founder to Form Committee of Creditors
Approximately 45% of user funds were stolen during the July 18 hack, and the platform has been under intense scrutiny since then. Moreover, the crypto exchange’s users are losing their calm as their assets are frozen and a full recovery is almost impossible.
Hence, in an official statement, Shetty called on the WazirX community to unite and actively participate in the recovery process. He stated, “We’re putting together a committee of creditors and we need YOU to be a part of it. Our aim is to ensure every voice within the WazirX family is heard, bringing together diverse perspectives to create a solution that benefits us all.”
His message emphasized the need for collective action and a united front in the wake of the platform’s troubles. Thus, Shetty added, “The path to resolution lies in unity, moving forward hand in hand, driven by the shared goal of a fair and swift outcome for everyone.”
We’re putting together a committee of creditors and we need YOU to be a part of it.
Our aim is to ensure every voice within the WazirX family is heard, bringing together diverse perspectives to create a solution that benefits us all.
We cannot face this challenge alone and we…
— Nischal (Shardeum) 🔼 (@NischalShetty) September 30, 2024
This move comes after Singapore High Court’s moratorium, granted on September 26, offers temporary relief to the exchange. The moratorium has put any repayment obligations to stakeholders on hold while the platform prepares its restructuring plan.
WazirX had originally filed for a six-month moratorium under the Insolvency, Restructuring, and Dissolution Act, but the court reduced the requested duration to four months. The court’s ruling imposes several conditions that the exchange must fulfill. These include greater transparency and communication with its users.
Conditions Under Moratorium
Among the conditions outlined by the court, WazirX is required to publish its wallet addresses via a court affidavit within three weeks of the moratorium order. The affidavit must detail both the wallets that were hacked and the remaining wallets under the exchange’s control.
Furthermore, the platform must respond to users’ queries in a court-mandated chat room within the same three-week timeframe. This level of disclosure is intended to provide transparency regarding the current state of the platform’s assets.
In addition to wallet disclosures, WazirX must also submit its latest management accounts and balance sheet via an affidavit within six weeks. Moreover, the voting process on any future restructuring plans will be overseen by independent parties, ensuring a fair and transparent process for creditors.
The creditor committee, which is in the process of being formed, will play a crucial role in shaping the restructuring efforts. Shetty’s appeal to the community is part of an effort to restore trust in the platform following the hack.
“We cannot face this challenge alone and we won’t succeed if we remain divided,” Shetty wrote. He further added, “Let’s work together to resolve this in the best interest of our WazirX family. Your support means everything.”
The exchange, if it requires more time to complete the restructuring process, must file an extension notice with the court three weeks before the moratorium’s expiration. The upcoming months will be critical as WazirX works to restore its operations, ensure the safety of remaining user funds, and rebuild trust among users.