WazirX Granted Four-Month Extension for $230 Million Debt Repayment by Singapore Court

WazirX co-founder Nischal Shetty announced that the Indian crypto exchange plans to focus on "resolution, recovery, and restructuring" after a Singapore court granted the company a four-month extension to repay its $230 million debt. The extension, shorter than the six months originally requested, comes in the wake of a significant hack in July that left WazirX scrambling to recover assets and restore user confidence.

Court-Imposed Conditions

The Singapore court's ruling includes several conditions. WazirX is required to disclose the addresses of its cryptocurrency wallets in a formal court affidavit. Additionally, the exchange must respond to all user inquiries and submit a full disclosure of its financial accounts within six weeks. Any decisions about the future of the company must be made through a vote conducted on an independent platform.

The parent company of WazirX, Singapore-based Zettai, filed for restructuring on August 23. The court-approved moratorium offers the company temporary protection from legal proceedings while it navigates the restructuring process.

In a statement provided to Moneycontrol, WazirX highlighted that the court acknowledged its proactive engagement with creditors and its swift action in filing for the moratorium.

Search for Recovery Solutions

As part of its recovery efforts, WazirX is actively in talks with 11 different exchanges and has signed non-disclosure agreements (NDAs) with three of them. The company is looking for a partner to infuse capital and help it overcome its current financial struggles.

Earlier this month, WazirX warned users that they are unlikely to recover 100% of their assets. After lifting its withdrawal suspension partially in the previous month, the exchange now allows users to withdraw up to 66% of their INR balances. However, it does not have sufficient reserves to enable withdrawals of crypto tokens.

The Aftermath of the Hack

WazirX has attributed the July hack to its wallet service provider, Liminal Custody, though the custodian has denied responsibility. An independent investigation cleared Liminal Custody of any wrongdoing. In response to the breach, WazirX has employed several strategies, including launching a bounty program to aid in asset recovery.

Meanwhile, the hacker responsible for the theft is reportedly nearing the completion of laundering the stolen funds, with only $6 million worth of Ethereum (ETH) remaining. The hacker has used Tornado Cash, a cryptocurrency mixer that conceals the source of funds, to obfuscate the trail.

As WazirX works to resolve its challenges, the four-month extension will provide a critical window for the company to stabilize and seek a path toward recovery.