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Creditors of WazirX, a cryptocurrency exchange that suffered a major hack, are facing a crucial decision in the coming weeks that could determine the timeline for recovering their stolen assets. If the restructuring plan is approved by over 75% of the voting creditors by value, they could start receiving their stolen cryptocurrency as early as April 2025.
This plan was previously sanctioned by a Singapore court. However, if the plan fails to secure the required majority, the exchange will move towards liquidation under Singapore’s Companies Act, which could delay the recovery until 2030 and potentially reduce the amount recovered due to asset devaluation.
The proposed restructuring scheme includes measures such as the launch of a decentralized exchange (DEX), the issuance of recovery tokens that can be traded, and the use of platform profits and new revenue streams to periodically buy back the recovery tokens. WazirX has also promised to restart trading operations and make initial payouts to creditors within 10 business days following the activation of the scheme.
The alternative, should the restructuring plan not receive the necessary support, would involve a liquidation process that might result in a fire sale of assets, leading to creditors receiving less than what they might under the restructuring plan due to the potential sale of assets at lower values.
WazirX, which was once India’s largest crypto exchange by trading volume, fell victim to a hack by the North Korean hacker group Lazarus in July 2024. The hackers made off with over $230 million in user funds, which they laundered through various addresses using Tornado Cash, making recovery efforts more challenging.
Since the hack, WazirX has faced significant hurdles, including criticism over its communication with users and the effectiveness of its fund recovery efforts. The exchange took legal steps to address the situation, filing for a moratorium and obtaining court approval for a restructuring plan in January, aimed at facilitating creditor recovery and avoiding total liquidation.
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