WazirX Files Moratorium Application Before Singapore Court

Hit by a $230 Mn crypto heist last month, crypto exchange WazirX on Wednesday (August 28) said it has filed an application with a Singapore court seeking moratorium.

In a blog post, the company said Zettai Pte, which holds the shares in its subsidiary and Wazir X parent Zanmai Labs Pvt Ltd, filed the moratorium application a day ago on August 27. The move, as per the exchange, will give it the necessary “breathing space” while Zettai facilitates restructuring of liabilities under a scheme of arrangement.

“We wish to update all users of the WazirX Platform that Zettai Pte Ltd has taken the next step in its efforts to address users’ cryptocurrency balances on the platform… and has on 27 August 2024 filed an application with the High Court of Singapore for a moratorium under section 64 of the Insolvency, Restructuring and Dissolution Act 2018…,” the post said. 

It is pertinent to note that a moratorium of 30 days automatically kicks in following the filing of the application. Subsequently, the Singapore Court will now rule on whether to grant the moratorium to the company. 

The date of hearing has not been fixed yet, added WazirX.

This comes nearly a week after the company informed its users that it would file an application in the High Court of Singapore to seek a moratorium to pursue a restructuring under a scheme of arrangement. 

At the time, the company said that the scheme would enable it to put forth a proposal to its creditors to restructure its debts to “deliver stronger recoveries to creditors” compared to a liquidation process. 

In the blog post, WazirX also said that there is an ongoing dispute between Zettai and Binance. “Nonetheless, while this dispute remains ongoing, Zettai has taken the initiative to concurrently facilitate a solution for users of the platform (WazirX) as contingent unsecured creditors of Zettai as quickly and effectively as possible,” added the blog. 

The company also said that users will receive a share of available token assets proportionate to their share of all users’ unsecured claims for their account balances under the planned restructuring exercise. 

“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,” added WazirX.

Following this, the exchange also plans to undertake “mechanisms” to increase recoveries of tokens through tracing and recovery of stolen tokens, implementation of revenue-generating products and profit-sharing mechanisms, and potential opportunities for third-party partnerships.

Meanwhile, the exchange said that it expects Zettai to “need” at least six months to consider the terms of the restructuring plan and work with the relevant stakeholders. 

The development comes a month after hackers stole nearly $234.9 Mn in crypto assets parked with the company. These represented 45% of total user funds on the platform. Subsequently, the company temporarily suspended withdrawals and filed a first information report (FIR) in connection with the cyberattack.

Additionally, it also pitched a socialised loss strategy last month, which proposed making customers absorb 45% of the losses caused by the hack. However, the plan was shelved after users slammed the proposal online. 

Last month, the crypto exchange revoked the suspension on withdrawals and opened up INR balance withdrawals starting August 26 in a staggered manner.