WazirX to open up INR withdrawals partially from Aug 26 after $230-mn hack

WazirX is also reducing INR withdrawal fees by 60 percent – from Rs 25 to Rs 10. (Representative image)

Hacked crypto exchange WazirX announced that it will open up INR balance withdrawals from the platform starting from August 26 but will only allow customers to access 66 percent of their funds.

WazirX is also reducing INR withdrawal fees by 60 percent – from Rs 25 to Rs 10. Crypto withdrawals, however, continue to remain stalled as the exchange has insufficient token assets available to meet all liabilities post the theft.

This comes a month after the exchange faced a cyberattack on one of its multisig wallets holding $230 million worth of crypto assets, that accounted for nearly 45 percent of the exchange’s holdings.

“While the operating entity for INR-related activities, Zanmai Labs Pvt Ltd (“Zanmai”), on the WazirX platform was not affected by the cyberattack and has sufficient INR reserves to cover all INR user balances, not all of these balances are currently available for withdrawal,” the exchange said in a blog post.

It added, “Due to ongoing disputes, and certain investigations by various law enforcement agencies (“LEAs”) which is assisting with (and it is not a target of such investigations), ~34% of INR balances are currently frozen and are not immediately available for withdrawal.”

Next steps

WazirX said that it will be shortly filing an application in the High Court of Singapore to “ensure that the platform has the time and breathing space it needs to pursue a restructuring under a Scheme of Arrangement.”

Through Scheme of Arrangement, a company can put forward a proposal to its creditors to restructure its debts and deliver stronger recoveries to creditors than under a liquidation subject to creditor approval and Court sanction.

“Concurrently, INR withdrawals will be made available in phases. We will be providing users with further updates in the coming days,” the exchange said.

WazirX said: “We have decided to pursue a Singapore Scheme of Arrangement to facilitate an equitable and user-approved distribution of cryptocurrency assets pursuant to a Scheme. A Scheme is a necessary step to ensure that users of the platform are treated fairly and in line with user preferences so that the outcome remains legally binding on all relevant parties."

Meanwhile, WazirX, its infrastructure partner Liminal, and other associated entities are facing a petition with the National Company Law Tribunal (NCLT) following the $230-million crypto asset theft, Moneycontrol had exclusively reported.

This comes after the exchange faced backlash for its previous strategy of socialising the loss, or the 55/45 approach, that’s would have allowed customers to access and trade only 55 percent of their assets on the exchange, while the remaining 45 percent will be converted to stablecoins (USDT) and locked by the exchange, irrespective of whether the customer’s assets have been stolen. WazirX had to drop this plan.