Indian cryptocurrency exchange WazirX has warned creditors that repayments from the $235 million hack could be delayed until 2030 if they reject the company’s restructuring plan. The exchange posted an update on February 4, outlining two possible outcomes—an approved restructuring that allows payouts to begin by April 2025, or a rejected plan that could result in years of delays.
A Critical Choice for Creditors
The Singapore High Court recently approved WazirX’s restructuring plan, which aims to recover stolen assets and compensate users. The exchange urged creditors to vote in favor of the proposal to ensure faster repayments. If creditors approve the plan, WazirX will restart trading operations and distribute initial payouts within 10 business days after activation.
WazirX restructuring plan: a breakdown of what happens if the Scheme is approved versus if it isn’t. Source: XThe repayment process will include liquid asset distributions and a new decentralized exchange (DEX) business model. WazirX will issue recovery tokens, which creditors can trade or redeem as more funds are recovered. The exchange claims this model will help users regain 75% to 80% of their lost funds over time.
Delays and Financial Losses If Creditors Reject the Plan
WazirX stated that creditors could face an uncertain and extended timeline if they choose liquidation over restructuring. The company stated that it must resolve ownership disputes before beginning any liquidation process, which could take years.
If liquidation occurs, the exchange warned that creditors will not benefit from future market price increases since they will receive funds in fiat currency. WazirXrX also warned that users might miss potential gains from future bull markets due to the extended waiting period.
The Singapore High Court had earlier supported WazirX’s restructuring plan over liquidation, stating that a structured recovery would be a better outcome for users. The court’s decision was based on financial reports from Kroll, an independent auditor, which projected that restructuring would result in higher user repayments than liquidation.
Indian Crypto Community Accuses WazirX of Manipulation
While WazirX pushes for creditors to approve its restructuring plan, many Indian crypto users are skeptical. The proposal has drawn criticism from users who feel that WazirX is forcing them into a no-win situation.
Some users believe the exchange is using the threat of a five-year delay as a scare tactic to pressure creditors into approving the plan. Many have pointed out that WazirX has previously proposed launching a DEX as a recovery solution, which met with strong opposition. Critics argue that tying fund recovery to a new business venture does not guarantee a full repayment. This would also create new risks for users.
Critics argue that the five-year delay is a scare tactic to push users into accepting the new DEX model. Source: XThere are also concerns over the mismanagement of remaining user funds. Some have accused WazirX of spending money on legal expenses instead of prioritizing user reimbursements. Others fear that the exchange is using the restructuring plan as a way to buy more time without offering clear guarantees of fund recovery.
India’s Strict Crypto Tax Rules May Create More Problems
Adding to the uncertainty, new Indian tax regulations on cryptocurrency could further impact WazirX users. Under the latest tax rules, undisclosed crypto gains will be subject to a 70% penalty, plus interest if unpaid for four years.
Some WazirX users now worry that receiving recovery tokens could trigger taxable events under India’s strict crypto laws. The new rules state that crypto transactions are subject to a 30% tax, with 1% TDS on transactions above ₹10,000.
If users receive compensation through recovery tokens and later sell them at a higher market value, they may be liable for additional taxes.
Voting Will Decide the Future of WazirX
The restructuring plan will only proceed if 75% of creditors, based on the total value of claims, vote in favor of it. If the majority approves the plan, repayments will begin in April 2025, and WazirX will resume trading operations. If the vote fails, the exchange will move toward liquidation under Section 301 of the Singapore Companies Act, which could take several years to complete.
WazirX has outlined its next steps if the restructuring is approved. The exchange will distribute net liquid assets to users as the first round of repayment. It will also introduce recovery tokens, which will be periodically repurchased using platform profits. WazirX claims that these steps will ensure long-term compensation for affected users. However, many remain skeptical about whether the plan will deliver full recovery of their funds.
If the restructuring plan fails, WazirX will liquidate its remaining assets and sell them at potentially lower values, which could reduce payouts for creditors. The exchange has stated that this outcome would be less favorable for users, as they would receive their funds in fiat currency rather than cryptocurrency, eliminating any chance of benefiting from a future market rebound.
The post WazirX Gives Creditors an Ultimatum — Approve Restructuring or Wait Until 2030 first appeared on Coinchapter.
The post WazirX Gives Creditors an Ultimatum — Approve Restructuring or Wait Until 2030 appeared first on Coinchapter.
