Hacked crypto exchange WazirX has said it will set up a 10-member committee of creditors (CoC) by October 9 to advise and provide feedback to the exchanges on it its business restructuring plan.
The creditors, in this case, are the users affected by the $230-million cyberattack in July. The country’s largest crypto exchange lost nearly 45 percent of its funds in the theft in one of its multisig wallets.
Currently under a four-month moratorium, the exchange in a recent town hall said even after restructuring is done, it will be able to return only 55-57 percent of the funds to the users.
The process of restructuring at is similar to that of now-defunct Coinbase-backed crypto lending platform Vauld. It had in 2022 rolled back operations, citing financial difficulties and challenging market environment.
Selection process
The CoC selection will focus on the distribution of creditors by count and value to ensure adequate representation. Currently, 87 percent of WazirX’s creditors account for less than 8 percent of the total claims by value.
To overcome this and ensure fair representation, the company would be use a combination of value and count in picking the members, it said.
“The Company will first establish a “Contingent Creditor Pool” by segmenting Creditors into tranches of 10% each based upon the total value of Claims (each a “Tranche”) – Creditors will be sorted in terms of smallest Claims to largest Claims, with this overall list being broken into 10 separate Tranches each representing 10% of Claims, with the sum of all Tranches amounting to $546.5m of Claims,” the exchange said in a blog post.
The blog post added, “Within each tranche, 1% of creditors will be selected at random to establish the Contingent Creditor Pool (~43k Creditors out of ~4.3m Creditors in total), allowing every Creditor an equal chance of selection by count within their Tranche, which has already been adjusted by value to mitigate impact from the significant numbers of Creditors with low Claims.”
Ultimately, the creditors selected for the Contingent Creditor Pool will be eligible to say if they are interested in a part of the CoC.
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