WazirX unveils a Scheme of Arrangement to recover from the $234 million cyberattack, ensuring fair asset distribution and future stability. In July 2024, WazirX, one of India’s largest cryptocurrency exchanges, faced a security breach that led to the loss of millions in digital assets. The attack, attributed to North Korean hackers, significantly impacted user funds and disrupted the platform’s operations.

To address this crisis, WazirX introduced a Scheme of Arrangement aimed at compensating affected users and stabilizing the platform. While this initiative is designed to maximize asset recovery, it has drawn mixed reactions from industry leaders, including the CEO of CoinDCX. WazirX had sought external support from Binance in an attempt to recover lost funds.

Recovery Plan: Scheme of Arrangement

The Scheme of Arrangement, proposed by Zettai Pte Ltd, a Singapore-incorporated company associated with WazirX, follows Singapore’s Insolvency, Restructuring, and Dissolution Act 2018 (IRDA). It serves as a structured approach to restructuring liabilities, distributing available funds, and ensuring a transparent recovery process.

The proposed scheme, designed to restructure WazirX’s cryptocurrency liabilities fairly and efficiently, requires approval from at least 50% of creditors (by number) and 75% of creditors (by value).

Key Aspects of the Scheme

1. First Asset Distribution Completed
   The initial phase of asset rebalancing is now complete, allowing users to check their estimated recoveries through the WazirX app. Once the scheme is fully approved, the first distribution will take place within 10 business days of the effective date.

2. Rebalancing of Net Liquid Platform Assets (NLPA)
   Users will receive a proportional allocation of rebalanced cryptocurrency assets to optimize recoveries.

3. Recovery Tokens (RTs) Introduced
   Recovery Tokens (RTs) will be issued on a pro-rata basis. These tokens allow users to benefit from potential asset recoveries, future platform revenue, and market-driven value appreciation.

4. Ongoing Efforts to Retrieve Lost and Illiquid Assets
   WazirX is working on recovering stolen assets through legal actions and forensic investigations. Additionally, steps are being taken to unlock illiquid holdings to further compensate users.

5. Voting Period for the Scheme
   Users can participate in the voting process on the KIS platform from March 19 to March 28, 2025. A successful vote ensures the plan moves forward as intended.

6. Projected Recovery Rate
   Creditors may recover an estimated 85.3% of their balances in USD terms, with the potential for additional distributions as more assets are recovered.

CoinDCX CEO Criticizes WazirX’s Response

Despite WazirX’s efforts, concerns have been raised about the transparency and execution of the recovery plan. CoinDCX CEO Sumit Gupta publicly questioned WazirX’s crisis management approach, pointing out areas where communication and accountability could be improved.

More details on this critique can be found here.

Binance’s Role: Can External Assistance Strengthen Recovery Efforts?

To improve asset recovery chances, WazirX has reached out to Binance for assistance. Binance, which had past ties with WazirX but distanced itself in 2023 due to regulatory disagreements, has yet to confirm any involvement. If Binance provides support, it could aid in tracking and potentially freezing stolen funds.

More on WazirX’s request for Binance’s assistance is available here.

Why Supporting the Scheme Benefits Users

Backing the Scheme of Arrangement offers several advantages, including:

• Quicker access to recovered assets, avoiding extended legal battles.
• Fair distribution of available funds.
• The opportunity to retain cryptocurrency holdings, with potential for market appreciation.
• Continued participation in future asset recovery efforts.
• Potential long-term gains if WazirX sustains its operations.

Risks of Rejecting the Plan

If the scheme is not approved, users may face:

• Extended delays in receiving any compensation.
• Reduced recoveries due to liquidation and legal expenses.
• No access to potential future asset recoveries.
• Permanent closure of WazirX, removing any possibility of long-term financial upside.

Looking Ahead: What This Means for WazirX Users

The Scheme of Arrangement represents a structured attempt to resolve the crisis while maintaining a pathway for financial recovery. With asset rebalancing completed and the voting period approaching, users must evaluate the benefits and risks before making their decision.

The outcome of this vote will determine whether WazirX successfully implements a structured recovery or faces prolonged uncertainty. As the process unfolds, stakeholders will be watching closely to see how this decision shapes the future of one of India’s most prominent cryptocurrency exchanges.