WazirX's Nischal Shetty Asks Users to Withdraw Available Funds as Full Recovery Unlikely

On Monday, September 2, the WazirX team, including co-founder Nischal Shetty, held a virtual townhall with members of the media. During this meeting, Shetty informed Gadgets360 that users in urgent need of funds have begun withdrawing their Indian Rupee (INR) balances from the platform. Initially, after the unfreezing of 66 percent of users' INR balances on August 26, there was a surge in withdrawals. However, the momentum has since slowed down. Despite this, the WazirX team advises users to retrieve their INR balances from the platform while financial restructuring efforts are underway.

On July 18, a multi-signature wallet belonging to WazirX, which was under the oversight of Liminal Custody, fell victim to a massive hack, resulting in a loss of over $230 million (approximately Rs. 1,900 crore). This incident caused significant financial distress for WazirX users, exacerbated by the exchange's decision to suspend trading, withdrawals, and deposit services. Currently, crypto withdrawals on the platform remain suspended, and 34 percent of users INR funds remain frozen pending the completion of the investigation.

Speaking to Gadgets 360, Shetty said, “people have been asking us, should I withdraw, or should I keep. We are recommending everyone that you know for now withdraw it, and whenever we restart, you can always deposit again.”

Meanwhile, in Singapore, Zettai has teamed up with a financial restructuring firm called Kroll, which will be assisting WazirX in getting its books back in order. Interacting with the media, Kroll director George Gwee said that users may be unable to recover around 43 percent of their funds they had on WazirX. Describing the best-case scenario for funds recovery, Gwee said users could obtain up to 57 percent of their WazirX deposits.

Last week, WazirX has filed for a mortarium in a Singapore court – essentially buying time to analyse its liabilities and reorganise its capital. It could take up to six months before a restructuring scheme is finalised by the exchange.

At present, the company has not provided a definite timeline for when crypto withdrawals will resume on the platform.

Shetty, in conversation with Gadgets360 stated that the WazirX team has been in constant touch with relevant authorities for investigating this hack.

“I can't go into the details of, you know, who we are talking to, what's happening. Having said that, I would say that we've been, you know, cooperative, and there's been a lot of movement in terms of helping find who was responsible for this attack, and the authorities are helping in whatever the way they can to figure out,” he noted.

It is notable that the WazirX team dodged all questions related to its relation with Binance, calling details ‘confidential'. Binance had claimed in November 2019 that it had acquired WazirX. Last year, however, former Binance CEO Changpeng Zhao claimed that the transaction of acquiring Wazirx “was never completed”. At the time, WazirX accused Binance of spreading false and misleading information against it in the market.