Indian cryptocurrency exchange WazirX has asked the Singapore High Court for a six-month moratorium to restructure its liabilities following a $234 million hack in July.
Rival exchange CoinSwitch is considering legal action to recover $9.6 million in assets deposited on the platform.
The filing was made by Zettai Pte, the Singapore-incorporated company whose subsidiary, Zanmai India, operates WazirX. The moratorium, effective for 30 days from August 27, aims to give WazirX time to develop a restructuring plan. The company says this plan is the most efficient way to address users’ cryptocurrency balances and facilitate recovery.
“From the day of the incident, we have tried to be in constant touch with the WazirX team, seeking recovery of the funds that are stuck on their exchange,” CoinSwitch said in a statement. “However, our efforts have not come to fruition, leaving us with no choice but to pursue legal action.”
WazirX co-founder Nischal Shetty submitted an affidavit supporting the application, revealing an ongoing dispute with Binance over ownership of the platform. The restructuring plan includes a pro-rata distribution of available token assets among users who are unsecured creditors, based on their account balances.
WazirX is also exploring options to engage a “white knight” investor or partner to provide rescue financing or support. The management is in discussions with 11 companies, some of which have expressed interest, though they are cautious due to potential legal actions.
The filing disclosed that the hack created a wave of panic, with fears of an uncontrolled bank run of withdrawal requests that the platform could not handle. WazirX has about 16 million users, with around 4.4 million maintaining cryptocurrency balances. Since the hack, the platform has received over 9,700 withdrawal requests and four legal notices.
As of July 18, when withdrawals were frozen, WazirX held $570 million for 4.35 million users, 94% of whom are from India. The platform still holds $284 million in assets. WazirX has set aside $12 million in cryptocurrency tokens to cover investigation and legal expenses.
