WazirX, its infrastructure partner Liminal, and other associated entities are facing a petition with the National Company Law Tribunal (NCLT) following a $230 million crypto asset theft.
Sources familiar with the matter told Moneycontrol that the petition, filed on August 5 in Indore, invokes Section 213(b) and Section 221 of the Companies Act, 2013. Section 213(b) allows any person to seek an investigation into a company's affairs if there are reasons to believe in mismanagement, malpractices, or fraudulent activities.
Under Section 221, the petitioner can request to freeze the company's assets following an inquiry and investigation.
“Emails have been sent to all the respondents notifying the same,” a source privy to the developments said.
Apart from WazirX, Liminal and its directors and founders, the respondents in the petition also included the Ministry of Home Affairs through principal secretary, Ministry of Finance through principal secretary, and Ministry of Corporate Affairs through principal secretary, and serious fraud investigation office.
The case was filed by a law student named Gauransh Vyas from Indore, as per the details available on the NCLT website. According to his LinkedIn profile, he is a legal intern with the Supreme Court of India.
Responding to Moneycontrol’s queries, a WazirX spokesperson said, “We are aware of the petition filed against us before the NCLT, Indore and we are taking necessary legal action. We strongly deny any and all allegations of fraud. Since it is an ongoing legal proceeding, we cannot discuss the details of the petition.
“We will respond as per the prescribed procedure under law before the NCLT. The NCLT will decide the weight of the petition on legal grounds,” the spokesperson added.
A Liminal spokesperson said, "Liminal's representative was part of the proceedings and has duly appeared before the court. As this matter is now sub judice, we are refraining from making any further comments at this time. However, we will continue to defend our position vigorously."
WazirX filed a first information report (FIR) with the PS Special Cell, PS Lodhi Colony in New Delhi on August 6 regarding the hack.
WazirX’s $230-million hack
WazirX is the country’s largest crypto exchange with nearly 33 percent Indian crypto users holding balances and having accounts with platform.
On July 18, it lost 45 percent of its holding crypto assets worth $230 million in a cyberattack on one of its multisig wallets. Multisig wallets are crypto wallets with two or more private keys needed to unlock and enable transactions.
Cybersecurity firm Cyfirma attributed the hack to the Lazarus Group, a North Korea-based state-sponsored hacking collective. This has also led to increased international attention on the incident, prompting the US Federal Bureau of Investigation (FBI) to call on WazirX to investigate the nature of the hack.
The exchange has also submitted its records to the Indian Computer Emergency Response Team (CERT-In) for further investigation.
Post the hack, WazirX temporarily paused trading and withdrawals on the platform. The exchange is currently exploring ways to restart the platform and bail out impacted customers. Its previously proposed plan to socialise the losses had faced immense backlash from customers; eventually getting scrapped.
WazirX’s founder Nischal Shetty has also been in talks with global exchanges, including its former partner Binance to get support or look for a possible buy out.
Sources had told Moneycontrol that Binance controls a significant chunk of WazirX’s revenue and around $80-million worth of WRX tokens, which is hindering the exchange’s bail out plans. Both the exchanges continue to be in a legal tussle.
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