Customers of Indian cryptocurrency exchange WazirX, which was hacked for $234 million in July, are unlikely to get all of their funds back through the ongoing restructuring process, the company's legal counsel said on Monday.
George Gwee, director of restructuring firm Kroll, which is working with Wajir X, said clients will not get back at least 43% of the money they have deposited with Wajir X. Last week, Wajir X sought six months of protection in the Singapore High Court while it restructures its debt.
Gwee told reporters that the best-case scenario would be a return of “between 55% and 57% of the funds.” In the restructuring, WazirX's priority is to distribute the remaining token assets to users pro rata in cryptocurrency, the company said. The company is in discussions about the distribution of profits from revenue-generating products, he added, but did not provide specific details.
The hack, which occurred in July, was the largest cryptocurrency theft ever in India and sent shock waves through the country's cryptocurrency industry. The company has been exploring ways to refund customers since then. In July, the company offered to give back to society the losses caused by “force majeure.”
WazirX assets as of August 24. Image credit: WazirX / YouTube
During the press conference, WazirX representatives avoided many questions about the capital raising effort. The company said it is in talks with an unnamed white knight, but noted that the capital will not be raised through equity due to an ongoing dispute with Binance, the world's largest cryptocurrency exchange, with which WazirX once had a close relationship.
In late 2019, Binance announced the acquisition of WazirX in a blog post, but later disputed the fact that it had acquired the company. After a public controversy, the crypto exchange ended its technology offering to the Indian company in 2022.
When asked about Binance's ownership of WazirX, the Indian company declined to comment. When asked about whether it would sell WazirX as part of the restructuring, a company representative said such a sale was not possible.
When asked whether the company could take legal action against multi-signature wallet providers Binance and Liminal, whose systems were allegedly compromised during the hack, WazirX representatives did not provide a clear response.
Pressure on WazirX has been mounting since CoinSwitch, another major Indian cryptocurrency exchange, launched legal action against the company last week to recover around $9.7 million worth of assets stuck on the platform.
WazirX's clients include Indian law enforcement agencies.