WazirX Hack Victims May Get Full Repayment—But Timeline Hinges on Creditor Vote
In July 2024, Indian cryptocurrency exchange WazirX suffered a devastating cyberattack, resulting in the theft of $235 million.
The attack, initially believed to be due to internal system vulnerabilities, was later discovered to have been executed through a fraudulent account sale on Telegram.
Following the breach, WazirX halted trading operations and suspended Bitcoin (BTC) and Ethereum (ETH) withdrawals to prevent further losses. The Indian authorities launched an investigation, which led to the arrest of a suspect from Bengal in November 2024.
The Proposed Recovery Plan
WazirX has proposed a restructuring plan to compensate affected users, and the decision now rests in the hands of its creditors. The exchange has shared a roadmap outlining two possible repayment scenarios.
If the plan is approved by over 75% of creditors (by value), recovery efforts will begin as early as April 2025. However, if the proposal is rejected, repayments could be delayed until 2030.
Key Features of the Restructuring Plan
If creditors approve the plan, WazirX will implement several measures to restore stability and facilitate repayments:
Resumption of Trading Operations: The exchange will restart trading within 10 business days of the plan’s activation.
Distribution of Net Liquid Assets: Initial repayments will be made using recovered funds.
Launch of a Decentralized Exchange (DEX): This aims to provide a more transparent and efficient trading environment.
Issuance of Recovery Tokens: Creditors will receive tradable tokens as part of the repayment strategy.
Periodic Token Buybacks: WazirX will repurchase recovery tokens using platform profits, ensuring their value remains stable.
These steps aim to restore user confidence and rebuild WazirX’s operational framework while compensating affected creditors.
What Happens If the Plan Is Rejected?
If creditors reject the restructuring proposal, WazirX will move towards liquidation under Section 301 of the Singapore Companies Act.
This would likely result in a fire sale of assets at significantly lower values, leading to reduced compensation for creditors.
WazirX has warned that liquidation could substantially delay repayments, with payouts potentially extending to 2030. The process may also result in lower asset values, making restructuring a more favorable option for affected users.
The Role of the North Korean Hacker Group Lazarus
According to investigations, the notorious North Korean hacker group Lazarus was behind the WazirX attack.
The stolen funds were laundered through multiple addresses using Tornado Cash, a tool known for obscuring transaction trails. This has made the recovery process particularly challenging for WazirX.
WazirX’s Legal and Strategic Response
Since the attack, WazirX has faced intense scrutiny over its handling of the crisis, particularly regarding communication with users and fund recovery efforts.
In an attempt to mitigate further losses, the exchange filed for a moratorium in Singapore courts and secured approval for a restructuring plan in January 2025.
The Singapore court-approved restructuring scheme provides an opportunity for creditors to recover their assets, avoiding total liquidation. However, the final decision rests with creditors, who will determine the fate of the exchange in the upcoming vote.
The Road Ahead: Creditors’ Crucial Vote
Creditors now face a critical decision that will shape the future of their recovery efforts. If they approve the restructuring plan, asset recovery could begin within months, with initial payouts promised within 10 business days of activation.
If the plan is rejected, liquidation will commence, delaying repayments and reducing the potential recovery amount.
As WazirX works to regain its financial stability and reputation, the upcoming vote will determine whether the exchange can recover from the hack or if its creditors will have to endure a prolonged and uncertain liquidation process.
