Singapore Court Grants 4-Month Conditional Moratorium To WazirX After $230 Million Hack

Singapore Court Grants 4-Month Conditional Moratorium To WazirX After $230 Million Hack

The ruling comes with conditions designed to maintain transparency and restore confidence among creditors and users

A Singapore court has granted cryptocurrency exchange WazirX a four-month conditional moratorium, providing temporary relief and allowing it to focus on resolving the aftermath of a major hack that led to over $230 million (45 percent of customers' funds) loss.

WazirX had pleaded for a six-month moratorium under Section 64 of the Insolvency, Restructuring, and Dissolution Act (IRDA).

The ruling comes with conditions, wherein WazirX must publicly disclose wallet addresses via a court affidavit; respond to user queries raised during court proceedings; release its financial information, including books of accounts, within six weeks, and ensure that future voting on court applications is conducted through an independent platform, scrutinized by third parties.

Transparency, particularly the disclosure of wallet, ensures that stakeholders have full visibility into the firm's actions as it navigates the recovery process.

The court acknowledged the proactive steps of WazirX, including its prompt filing for the moratorium. The move facilitates the fastest, creditor-approved, and legally binding resolution to restore users' crypto balances.

The company stated, "We are working diligently with our advisors and stakeholders to develop a comprehensive plan that addresses the needs of all involved parties. WazirX appreciates the court's trust and confidence in our actions.”

Nischal Shetty, the founder of WazirX remarked, “We are thankful for the court's decision, allowing us to focus on our path to resolution, recovery, and restructuring. Our immediate filing for the moratorium was a decisive step to ensure the fastest, fairest, creditor-approved, legally binding path, where creditors have a token choice and potential upside in a bull run."

The court's decision follows a massive security breach in July 2024. It resulted in WazirX losing over $230 million in customers’ funds. The hacker reportedly laundered the stolen funds using Tornado Cash to obscure transactions. The court acknowledged that despite challenges, WazirX acted in good faith by seeking the moratorium.

However, the legal advisers of WazirX have cautioned that customers may not fully recover their funds, especially in cryptocurrency terms, raising concerns about the extent of recovery for affected users.

While emphasizing the importance of transparency in the process, during the court proceedings, the judge asked the representatives of WazirX to reveal any additional assets beyond the crypto tokens held by the exchange.