WazirX Customers May Only Recover Half of Stolen Crypto

The WazirX cryptocurrency exchange, reeling from a massive $234 million hack that occurred in July, faces a grim outlook for its customers, who are now unlikely to be fully reimbursed in cryptocurrency. According to legal advisers, the chances of full recovery are slim, and much depends on market improvements and potential external support.

In a recent conference call, legal experts and WazirX co-founder Nischal Shetty addressed the daunting task of recovering the stolen funds. George Gwee, a director at the restructuring firm Kroll, shared a sobering assessment: customers may recover only between 55% and 57% of their assets.

The exchange lost nearly 45% of its customers’ holdings during the cyberattack, and the path to reclaiming these funds is uncertain. Gwee highlighted that it is “extremely unlikely” that customers will see full reimbursement in cryptocurrency. Instead, any recovery would be contingent on the success of ongoing negotiations and favorable market conditions.

Adding to the complexity, the Singapore High Court is set to consider WazirX’s request for a six-month protection period to restructure its liabilities. This request was filed by Zettai, the Singapore-incorporated entity whose subsidiary, Zanmai India, operates WazirX. The protection period is seen as critical for the exchange to stabilize its operations and explore various recovery options.

During the call, Nischal Shetty acknowledged the challenges facing WazirX, stating that the figures provided are current as of Monday and that ongoing efforts aim to narrow the gap between lost and recoverable funds. “Over the next several weeks, it will be easier and clearer on each stage where we can fill the gap,” Nischal Shetty remarked, offering a glimmer of hope for concerned customers.

Jason Kardachi, managing director at Kroll, also weighed in, noting that while there are potential avenues to improve recovery—such as the intervention of a “white knight” or the successful retrieval of stolen assets—customers should temper their expectations. Any improvements are likely to be in U.S. dollar terms rather than the original cryptocurrency, a significant shift that may disappoint those hoping for a full crypto-based recovery.

The situation is further complicated by an ongoing ownership dispute between WazirX and Binance, the world’s largest cryptocurrency exchange. While Shetty and his legal team refrained from providing details due to confidentiality agreements, Kardachi mentioned that approximately 55% of customer funds could be made available before the ownership dispute is resolved, offering some measure of reassurance.

The WazirX hack has exposed vulnerabilities within the crypto exchange sector, highlighting the need for stronger security measures and clear recovery strategies. As WazirX navigates this challenging period, customers are left in a state of uncertainty, hoping for the best while bracing for potential significant losses.

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