WazirX, a prominent cryptocurrency exchange, is set to approach the Singapore High Court on September 3 through its parent company, Zettai, to file for a moratorium. This legal move aims to temporarily suspend any legal actions against the exchange while it formulates a plan to compensate its 16 million users in India. The decision follows a devastating cyberattack on July 18, which resulted in the loss of $230 million (approximately ₹2,000 crore) in user funds.
Virtual Townhall to Address User Concerns
Ahead of the court hearing, WazirX has scheduled a virtual Townhall meeting for this afternoon. The event is intended to discuss the exchange’s restructuring plan and the moratorium application with its user base. WazirX co-founder Nischal Shetty revealed that around 10,000 users have expressed their support for the moratorium application, though this represents a mere 0.0006% of the platform’s total user base.
Understanding the Moratorium Application
The moratorium application is a crucial step for WazirX as it seeks to secure time to stabilize its operations after the significant financial setback. The cyberattack led to the loss of 45% of user funds, amounting to $234 million. Zettai’s appeal to the Singapore High Court is designed to give WazirX the necessary “breathing space” to navigate these challenges and explore options to compensate affected users.
Key Issues at the Townhall Event
During the Townhall, several pressing issues are expected to be addressed:
Clarification on Fund Discrepancies: WazirX recently admitted to errors in reporting user balances, initially stating a total of $570 million, later corrected to $546 million. Users will be seeking detailed explanations for this discrepancy and its implications for their claims.
Legal Expenses Deduction: Another major concern for users is the deduction of ₹100 crore ($12 million) from their funds to cover legal expenses. Questions are likely to arise about the justification for this deduction, especially in light of the absence of contributions from the WazirX team.
Distribution of Remaining Crypto: Users are eager for clarity on how the remaining funds will be distributed—whether it will be based on the value of the cryptocurrency at the time of the hack or if future potential value increases will be considered.
User Expectations and Demands
WazirX users are demanding greater transparency and accountability from the exchange. They are particularly interested in understanding how the remaining funds will be managed and whether any future gains in cryptocurrency value will be reflected in the compensation plan. Additionally, there is a strong call for WazirX to disclose more information about its financial dealings, particularly those related to the cyberattack and the ensuing legal battles.
As WazirX prepares to present its case in Singapore, the exchange faces mounting pressure to restore trust and provide clear solutions for its extensive user base. The outcomes of both the Townhall and the court hearing will be closely watched by the cryptocurrency community and may set significant precedents for the industry.
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