In a setback for investors of crypto currency, WazirX has confirmed that its wallet holders are expected to lose 43 per cent of their money, in the aftermath of the hack in July. The statement comes ahead of the firm awaiting an approval for its asset restructuring scheme from a Singapore court, the hearing for which is scheduled on Tuesday.

In a town hall on Monday, attended by select journalists, WazirX advisers said customers will probably lose 43 per cent of the funds they had invested in WazirX. As much as 55-57 per cent of the funds will be returned to customers, if they are not able to rope in a possible white knight, according to George Gwee, a Director at Kroll, which is handling asset restructuring for WazirX

Bid to socialise losses

On Tuesday, the Singapore High Court will hear WazirX’s request for six months’ protection while it restructures its liabilities after losing $234 million, or 45% of customers’ funds, to a cyberattack in July. The request was made by Singapore-incorporated Zettai, whose subsidiary Zanmai India operates the exchange.

In the proposed scheme, WaxirX is seeking legal sanction for their earlier plan to socialise losses amongst all wallet holders, even if their tokens were not affected by the $234 million breach.

On Monday, the crypto firm conducted two back-to-back town halls with its customers, who are ‘unsecured creditors’ under the new scheme, as well as select journalists. Co-founder Nischal Shetty was in attendance for both meetings along with his advisers.

Shetty reiterated that the trading firm is in talks with 11 partners who can come in as potential white knights. However, given WazirX’ legal tangle with Binance, these cannot be equity partnerships, according to Shetty.

Recovery of funds

Regarding the recovery of funds, Shetty said that the objective is to reduce the gap between the original assets of customers and the funds which will be recovered. 

“You’re not in a position to see it today because we’re in negotiation, in ideation stage,” Shetty said, adding, “Over the next several weeks, it will be easier and clearer on each stage where we can fill the gap.”

Kroll Managing Director Jason Kardachi said the figures could change if a so-called white knight steps in or if the funds are recovered, among other options previously mentioned.

“In crypto terms, it’s extremely unlikely that we can make people whole,” Kardachi said. “So, whatever profits we generate or contributions from white knights, or third parties, can help improve the recovery in crypto terms. But, I don’t think it’s realistic to think that we could ever make people whole when half or thereabouts of the crypto has suffered from the cyberattack.”

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