WazirX Charts Recovery Path After $235 Million Cyberattack, Launches Restructuring Plan

Indian cryptocurrency exchange WazirX is making strides toward recovery after suffering a massive $235 million cyberattack in July 2024. The exchange has unveiled a comprehensive restructuring plan designed to compensate affected users, rebuild its operations, and regain trust. The plan is being executed under the supervision of the Singaporean legal system, and has already gained some momentum.

The Aftermath of the Attack

WazirX, one of India’s largest cryptocurrency exchanges, fell victim to a significant security breach in July 2024. The attack, reportedly orchestrated by North Korea’s notorious Lazarus Group, resulted in the theft of approximately $235 million in cryptocurrencies. In response, WazirX has taken legal and financial steps to mitigate the damage and support its user base.

The company’s parent entity, Zettai, filed for a moratorium at the Singapore High Court in August 2024, seeking approval for a restructuring plan under the Singapore Scheme of Arrangement. This court-approved process allows companies to restructure their debts and liabilities without resorting to liquidation, and it provides a framework for resolving creditor claims in an orderly manner.

A Clear Path to Recovery

As of December 2024, WazirX reported liquid assets totaling $566.38 million in USDT, exceeding the $546.47 million in claims filed by users in the aftermath of the attack. With these assets available, WazirX is moving forward with a plan to distribute funds back to users through a combination of traditional payouts and innovative recovery tokens.

The company has introduced the concept of "recovery tokens," which are designed to allow users to recoup their losses by benefiting from future profits generated by the exchange’s operations and the recovery of stolen assets. The initial step in the recovery process will involve distributing funds through tokens, with users expected to receive approximately 75% to 80% of their account balance value at the time of the cyberattack.

WazirX’s founder, Nischal Shetty, emphasized that this restructuring initiative is crucial for restoring user confidence. "Our swift filing for the moratorium and application to the court for a Scheme process was a decisive step taken for the benefit of users, so they can receive distributions as soon as possible," Shetty said in an interview with Cointelegraph. "My number one goal is to add more value than what was stolen."

Once the Scheme is approved by creditors and sanctioned by the court, WazirX plans to initiate the first round of token distributions within 10 business days. The remaining claims will be settled through recovery tokens, which will be periodically repurchased using profits from the exchange’s operations and a proposed decentralized exchange (DEX) platform.

Launch of Decentralized Exchange (DEX) and Additional Recovery Plans

To further enhance its recovery efforts, WazirX is planning to launch a decentralized exchange (DEX). The DEX is expected to generate additional profits that can be used to settle outstanding claims and ensure the long-term sustainability of the exchange.

In a parallel development, WazirX’s competitor, CoinSwitch, has also stepped in to assist victims of the cyberattack. On January 7, CoinSwitch announced the launch of the "CoinSwitch Cares" recovery fund, aimed at supporting those affected by the WazirX hack. The recovery fund, which totals 600 crore Indian rupees (approximately $69.9 million), is designed to offer financial assistance to victims who lost funds in the attack.

CoinSwitch has also confirmed that it is pursuing legal action against WazirX in order to recover 2% of its own funds that were trapped on the exchange during the attack. This claim amounts to approximately 12.4 crore rupees ($1.44 million).

A Long Road Ahead, But Hopeful Outlook

Despite the challenges, WazirX’s efforts to restore trust and compensate its users reflect a determined and structured approach to recovery. The introduction of recovery tokens, the planned DEX launch, and the financial backing from the Singapore court system all demonstrate a commitment to ensuring that users who were affected by the hack will have an opportunity to recover their losses.

The coming months will be critical in determining whether the restructuring plan will successfully address the claims of users and restore WazirX to a position of strength in the Indian crypto market. However, with its legal and financial mechanisms in place, WazirX seems poised to navigate this difficult chapter and emerge stronger in the long term.