WazirX's Court-Approved Recovery Plan: Court Date Set and Payouts Expected Within 10 Days

WazirX, the Indian cryptocurrency exchange, has received approval from the Singapore High Court for its restructuring plan following a significant cyberattack in July 2024, which resulted in a loss of over $230 million. The court's decision enables the exchange to proceed with compensating affected users, aiming to return 75% to 80% of the lost funds through a structured process involving both immediate and future distributions.

Court Approval and Restructuring Plan

The Singapore High Court's approval marks a pivotal moment for WazirX, allowing the implementation of a recovery strategy that includes the issuance of Recovery Tokens (RTs). These tokens represent a claim to future profits and potential recoveries of illiquid or stolen assets, providing creditors with a stake in the platform's financial recovery. The plan stipulates that the first distribution of liquid assets will occur within 10 business days following the effective date of the scheme, contingent upon the court's timelines and the completion of necessary procedures.

Recovery Tokens and Future Distributions

Recovery Tokens are designed to offer creditors a share in the platform's future earnings and any recovered assets. These tokens will be issued on a pro-rata basis, reflecting each creditor's approved claim. Subsequent distributions will involve the purchase of RTs, with milestones set every three months to assess and facilitate additional recoveries.

User Participation and Transparency

To ensure transparency and user engagement, WazirX has introduced tools like the "Find My Balance" feature, allowing creditors to verify their claims and monitor the recovery process. Additionally, a preliminary creditor list and account balance snapshot as of July 18, 2024, have been made available, enabling users to track their entitlements and stay informed about the ongoing proceedings.

Implications for Creditors

While the restructuring plan offers a structured approach to recovery, it is not without its challenges. Creditors are required to vote on the proposal, and a minimum of 75% approval is necessary for its implementation. Failure to approve the plan could result in liquidation, potentially extending the recovery timeline to several years and possibly yielding lower returns. Therefore, affected users are encouraged to participate in the voting process to influence the outcome and expedite the recovery of their funds.

WazirX's court-approved restructuring plan represents a significant effort to address the aftermath of the 2024 cyberattack. By combining immediate asset distributions with long-term recovery mechanisms through Recovery Tokens, the exchange aims to restore a substantial portion of the lost funds to its users. However, the success of this plan hinges on creditor participation and approval, underscoring the importance of collective action in navigating the complexities of financial restitution in the cryptocurrency sector.