WazirX, a prominent Indian cryptocurrency exchange, has accelerated its Phase 2 of INR withdrawals before the September 9 deadline. Users can now access up to 66% of their INR balances, providing some relief following the platform’s recent cyberattack. However, crypto trading on the exchange will remain suspended for six months, a significant blow to traders relying on the platform.
WazirX’s swift response to the cyberattack
On July 18, WazirX suffered a significant cyberattack, resulting in the loss of over $230 million, which accounts for approximately 45% of customer funds. The attack severely impacted trading operations, leading the exchange to file for a moratorium in the Singapore High Court. This move was intended to secure a relief period to restructure its liabilities and recover from the substantial financial hit. In response to the crisis, WazirX has been working on a phased withdrawal plan for its users, with Phase 2 now launched ahead of schedule.
Crypto trading suspension extended
Despite the expedited start to the second phase of INR withdrawals, WazirX has announced that crypto trading will be suspended for six additional months. This decision has frustrated traders, as the platform remains inaccessible for trading activities. The six-month pause has been attributed to the complexities of WazirX’s recovery strategy, which involves integrating feedback from the company’s 4.3 million creditors.
Before the announcement, WazirX hosted a virtual town hall meeting to discuss their reorganization efforts. However, the meeting raised more concerns than it addressed. Budhil Vyas, a well-known crypto influencer, expressed dissatisfaction with the conference via social media. Vyas criticized the lack of transparency during the event, noting that WazirX disabled comments and only accepted inquiries via email. He further commented on the platform’s failure to provide clear information about the $230 million hack, blaming a third-party company, Liminal, without apologizing or taking accountability.
Zettai seeks investor support for recovery
Zettai, WazirX’s parent company, has been actively seeking investor support to aid in the recovery process. The company has approached 11 cryptocurrency exchanges, each managing between 5.5 million and 100 million user bases, with daily transactions ranging from $5 million to $4 billion. Zettai is exploring funding and partnership opportunities with these exchanges to bolster its recovery efforts.
During the most recent town hall conference, Nischal Shetty, co-founder of WazirX, highlighted the importance of securing investor support. He emphasized that the six-month trading suspension is necessary to execute the recovery strategy effectively. This strategy will also incorporate the input of WazirX’s 4.3 million creditors.
Despite these efforts, Jason Karachi, managing director at Zettai’s advisory firm, Kroll, offered a sobering perspective. He indicated that even with investor support, the company would likely recover only 55-57% of the lost crypto assets, leaving a significant gap in the recovery process.
WazirX’s swift actions to expedite INR withdrawals demonstrate a commitment to restoring user confidence, but the extended suspension of crypto trading poses ongoing challenges for the platform’s future operations. As the exchange navigates its recovery, the next six months will be critical in determining the success of its restructuring efforts.