WazirX, an Indian cryptocurrency exchange, has been granted a four-month conditional moratorium by Singapore courts. The legal protection comes 2 months after a $230 million hack that left investors unable to withdraw their funds.
The moratorium, granted under Singapore’s Insolvency, Restructuring, and Dissolution Act (IRDA), temporarily prevents creditors from taking legal action against WazirX.
Singapore court grants WazirX four months of respite
The Singapore courts have granted a four-month moratorium to the Indian crypto exchange WazirX. According to a statement shared by the exchange with Cryptopolitan, WazirX has adhered to legal and procedural mandates under Section 64 of the Insolvency, Restructuring, and Dissolution Act (IRDA).
The decision is a legal respite for the exchange which is owned by Indian entity Zanmai Labs. The exchange was hit by a $230 million hack about two months ago that resulted in investors being unable to withdraw their investments. A court moratorium becomes legally binding to temporarily suspend creditors from taking any action against WazirX.
Under the court’s conditions, WazirX is required to take several transparency measures. It includes the exchange making wallet addresses public through a court affidavit, addressing user queries raised in court, releasing comprehensive financial information, and ensuring that future voting for court applications is subjected to independent oversight.
The exchange says that it is working closely with advisors and stakeholders to develop a comprehensive plan that meets the needs of all parties involved.
Moratorium extension is at the court’s discretion
Nischal Shetty, the founder of the exchange said in the company statement that the decision allows them to focus on WazirX’s resolution, recovery, and restructuring.
According to him, “Our immediate filing for the moratorium was a decisive step taken to ensure the fastest, fairest, creditor-approved, legally binding path to resolution where creditors have a token choice and potential upside in a bull run.”
Meanwhile, a former employee told a local paper that the exchange founders, including Shetty, ghosted the exchange to concentrate on other projects. The employee blamed their shortsighted decision-making for the July hack.
WazirX was founded by Siddharth Menon, Sameer Hanuman Mhatre, and Nischal Shetty in 2018. By the start of 2022, Shetty and Menon had reportedly relocated to Dubai.
A crypto commentator on X noted, “The Indian crypto community needs to stay vigilant, as exchanges often prioritize their survival over user protection.”
Meanwhile, Shetty says that the company feels the weight of the cyberattack alongside its users. Once a moratorium ends, creditors can resume legal proceedings against the entity if the court decides not to extend the previous order.
In this case, after the 4-month period ends, creditors might pursue their legal interests over the company’s (WazirX) assets.
