WazirX Relying On 'White Knights' To Recover From $235-Million Theft, Only 55%-57% Of Stolen Funds Recoverable

WazirX has initiated the second phase of its INR withdrawal strategy for investors. All eligible users can now withdraw up to 66 per cent of their balances.

Zettai Pte Ltd, the Singapore-based operator of the cryptocurrency platform WazirX, is in discussions with 11 crypto exchanges and trading businesses to secure rescue financing and partnerships following a cyberattack in July that resulted in the theft of $235 million. During a recent townhall, WazirX co-founder and CEO Nischal Shetty revealed that the company is exploring various collaboration opportunities.

'White Knights'

“There are several ideas from ‘white knights’ to collaborate … there are creative ways to do this rather than acquiring the platform (by a third party), which is not possible in this case because the ownership is disputed,” Shetty stated, emphasising that a traditional acquisition is not feasible due to disputed ownership issues. 

Zettai was previously owned by Binance until January 2023, when Binance announced its exit from global operations. Despite this, Zettai maintains that Binance’s termination of the arrangement was unjustified.

New Revenue Streams

To aid recovery, Zettai is considering new revenue streams, and profit-sharing strategies, and using forensic analysis and litigation support to trace stolen assets.

The company is also exploring airdrops and token asset deployment as methods to generate returns.

Full Compensation May Not Be Possible For Investors

However, Shetty and Zettai’s legal advisors have cautioned that any assistance from potential partners, or "white knights," may not fully compensate investors for their losses.

Jason Kardachi, managing director of Zettai’s advisory firm Kroll, noted that investors should not expect full restitution, estimating that only 55 per cent to 57 per cent of the stolen funds might be recoverable.

The 11 exchanges in discussions with Zettai include major industry players handling between 5.5 million and 100 million users, with daily transaction volumes ranging from $5 million to $4 billion. Zettai has signed non-disclosure agreements with three of these exchanges, as stated in an affidavit filed with the Singapore High Court on August 27.

Six-Month Moratorium

Zettai has sought a six-month moratorium from the Singaporean court to shield itself from legal actions while it undergoes restructuring. A 30-day automatic moratorium has already taken effect following the filing of the application. The proposed restructuring plan, expected to span at least six months, will see the impact of the hack spread across all platform users, who will be treated as unsecured creditors.

The July cyberattack, which froze trading and remaining funds on WazirX, stands as one of the most severe breaches in the history of Indian crypto exchanges, wiping out nearly half of the platform’s estimated reserves.

INR Withdrawal Phase 2 Initiated

Meanwhile, WazirX has initiated the second phase of its INR withdrawal strategy for investors. All eligible users can now withdraw up to 66 per cent of their balances.

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