Following a severe cyberattack that brought WazirX, an Indian cryptocurrency exchange, to its knees last July 2024, the company has set aside $12 million in anticipation of covering legal fees and ensuring recovery from the disaster. The attack netted thieves $230 million in value of different cryptocurrencies, including $102 million in Shibu Inu tokens. Many users were left without access to their funds.
The Cyberattack and Its Aftermath
The hack in July was the largest to affect WazirX, one of the key virtual currency exchanges in the cryptography history of India. A heist that was very easy resulted in hackers laying their hands on an amount as huge as $230 million, making life really tough at WazirX. With this, WazirX had to freeze withdrawals, thus leaving several users marooned and seriously denting trust in this exchange.
The emergency move follows the immediate parent of WazirX, Singapore-based Zettai Pte Ltd, taking emergency measures immediately after the hacking incident aimed at restoring stability. This follows the company setting aside $12 million to address continuous investigations, legal proceedings, and restructuring efforts intended to manage the liabilities from the hack.
- B) Seeking a Moratorium for Breathing Space
To further its recovery efforts, Zettai filed an affidavit with the High Court of Singapore on Wednesday, August 30, 2024, seeking a 30-day moratorium. This will give WazirX adequate time to enable it to hold discussions with investors and creditors without immediate legal disruption.
The moratorium, if granted, would provide WazirX with the much-needed “breathing space” to continue its operations while Zettai works out a detailed plan for restructuring the various debts and liabilities of the company. The moratorium is seen as crucial for ensuring the continuity of the platform and preventing further financial instability.
Legal Action and the CoinSwitch Lawsuit
Meanwhile, things have gotten further complicated with CoinSwitch, a rival cryptocurrency exchange, filing a lawsuit against the company. In pursuit of recovering more than $9 million in funds stuck on WazirX’s platform following the cyberattack, the lawsuit was filed on the same day as the moratorium request by WazirX.
This lawsuit by CoinSwitch shows the rising discomfort in the Indian cryptocurrency market. The lawsuit layers more drama on the already eventful period of WazirX as the firm struggles to get back into shape from the cybersecurity attack it faced and simultaneously fights court battles with its competitors.
WazirX
Recovery Plan of Zettai and Discussion with Investors
This includes, but is not limited to, several important constituent elements, like the resumption of operations at WazirX and rebuilding users’ trust in the platform. As stated in the affidavit filed with the court, Zettai has liquid assets of $284 million in various cryptocurrencies. Additionally, the $12 million in reserve is for investigations and legal costs that are continuing.
It is further engaging financial and legal advisors to classify user token balances, rebalance the available assets, and make possible in-kind crypto distributions to users instead of fiat currency. This approach would restore a portion of the lost assets to users in the quickest manner possible.
Meanwhile, Zettai is believed to be negotiating with 11 other, so-called “white knight” investors, who are major crypto exchanges and trading firms; such investors may provide the capital needed for affected users to recover their funds and stabilize WazirX’s operations.
Attempted to find stolen assets
In its efforts to recover the stolen assets, Zettai engaged the services of a third-party blockchain forensics firm called ZeroShadow. ZeroShadow is working to track the assets and block the identified wallet addresses associated with the hackers. Zettai reached out to over 500 crypto exchanges worldwide to help in that regard. It hopes to prevent the stolen assets from being transferred or liquidated.
The Binance ownership dispute
If this was not enough, the spat with Binance was another factor that overcomplicated the already bad situation in which WazirX found itself. All this started after Binance attempted to terminate WazirX wallets and later distanced itself from the platform in 2022. Although early claims by Binance said that the exchange had acquired WazirX back in 2019, the question of ownership and control over the latter remains highly disputed.
Zettai has now assumed the assets of WazirX and is hoping for a six-month runway so that every crypto can be withdrawn. The company is on overdrive to sort out the issues between the ownership and operational front that have been dogging the platform.
Conclusion
The next couple of months will be crucial for WazirX, working its way around the legal and financial issues caused by the cyberattack. How well the company is able to recover the stolen assets, get the legal issues sorted out, and restore users’ trust will define its future in the highly competitive cryptocurrency market of India. For the time being, WazirX is trying to stabilize the platform and secure the remaining assets.
