WazirX has taken a significant step in dealing with the fallout from the July 2024 cyberattack that resulted in a substantial theft of cryptocurrency. Zettai Pte Ltd, the company behind the platform, has filed an application with the Singapore High Court for a moratorium under the Insolvency, Restructuring and Dissolution Act 2018. This move aims to provide the company with the time needed to restructure its liabilities and address the balances of users affected by the theft.
The filing of the moratorium application marks an important moment in Zettai’s efforts to stabilise the platform and work towards a solution that could potentially recover some of the stolen assets. The company has communicated to its users that this legal action is intended to offer a structured path forward, allowing Zettai to work on a scheme of arrangement that would ensure a fair and legally binding distribution of the remaining assets.
The moratorium, if granted by the Singapore Court, would create a temporary pause on creditor enforcement actions, giving Zettai the necessary breathing space to pursue its restructuring efforts. An automatic 30-day moratorium is already in effect following the application, and the court will soon determine whether to extend this period. The hearing date for the moratorium has yet to be scheduled, and further updates will be provided to users as the situation evolves.
This legal move also occurs amid an ongoing dispute between Zettai and Binance, though the details remain confidential. Despite the dispute, Zettai is pushing ahead with its plans to protect user interests and resolve the cryptocurrency balances on the platform. The moratorium application is seen as a critical step in this process, with the goal of avoiding more uncertain and potentially riskier alternatives.
Zettai has outlined its intentions to implement a scheme of arrangement as part of its restructuring plan. The scheme would involve distributing the available token assets to users in a manner proportionate to their unsecured claims. Users affected by the cyberattack would receive a share of the remaining tokens, with efforts being made to increase these recoveries through various mechanisms. These could include tracing and recovering stolen tokens, developing revenue-generating products, and forming potential partnerships with third parties.
The restructuring under the scheme is designed to be fair and efficient, ensuring that all users are treated equitably. Once approved by creditors and sanctioned by the Singapore Court, the scheme would be legally binding on all parties involved, including Zettai. The company estimates that it will need at least six months to finalise the terms of the restructuring plan and engage with stakeholders to ensure a comprehensive solution.
While some users may find the timeline of six months longer than expected, Zettai argues that this is the most effective and cost-efficient approach to resolving the situation. Alternative routes for addressing the crypto balances could involve undefined risks and extended timelines, making the restructuring plan under the scheme a more favourable option.
Zettai is actively seeking the support of its users for the moratorium and subsequent restructuring. The company emphasises that everyone involved shares the common goal of achieving the best possible outcome for users under the current circumstances. By supporting the moratorium, users would be contributing to the efforts to stabilise the platform and work towards a resolution that benefits all affected parties.
To ensure transparency and address any concerns, Zettai has planned a town hall via video conference during the first week of September 2024. This session will provide an opportunity for users to learn more about the moratorium and the scheme of arrangement. The town hall will also serve as a platform for users to ask questions and receive detailed explanations from Zettai’s financial and legal advisors.
The advisors supporting Zettai in this process include Kroll Pte Ltd as financial advisors, Rajah & Tann Singapore LLP as legal advisors in Singapore, and Nishith Desai Associates as legal advisors in India. The collaboration of these experts highlights the seriousness with which Zettai is approaching the restructuring process.
As users await further details, many questions remain about the future of the platform and the recovery of their assets. Zettai has addressed some of these concerns through a series of FAQs provided in their communications.
One key question relates to the nature of the scheme of arrangement under Singapore law. This corporate rescue mechanism allows a company to propose a restructuring plan to its creditors, which could result in stronger recoveries compared to an insolvent liquidation. For the scheme to be effective, it must receive approval from a majority of creditors representing at least 75% of the liabilities and be sanctioned by the court.
Another important point is the definition of a moratorium and its role in the restructuring process. A moratorium provides legal protection from creditor actions, giving the company time to work on a restructuring plan without the immediate threat of enforcement proceedings. Zettai has applied for the moratorium to ensure that it has the necessary space to develop a plan that maximises recoveries for its creditors.
Regarding the timeline for reopening cryptocurrency withdrawals, Zettai has indicated that this will depend on the approval and implementation of the restructuring scheme. The company estimates that the process could take at least six months, but it believes that this is the fastest route to allowing users to access their funds in a structured and legally compliant manner.
Users have also been classified as unsecured creditors due to the nature of their claims against the platform. Unlike certain law enforcement agencies that had a special arrangement with the platform, general users do not have a proprietary claim over specific tokens. Instead, they hold unsecured claims for the value of their token balances, making the restructuring scheme a critical tool for ensuring equitable recovery.
The question of why Zettai cannot simply reopen cryptocurrency withdrawals immediately is also addressed. The cyberattack significantly disrupted the platform’s token assets, particularly ERC-20 tokens, creating an imbalance between the available assets and the user balances. Reopening withdrawals without a structured plan would risk further complications, making the proposed scheme of arrangement a more prudent approach.
Zettai’s steps towards addressing the aftermath of the cyberattack through a court-approved moratorium and restructuring scheme represent a calculated effort to protect user interests and stabilise the platform. While the road ahead may be challenging, the company’s focus remains on achieving a fair and efficient resolution for all involved. As the process unfolds, users will need to stay informed and engaged, participating in the upcoming town hall and supporting the efforts to bring about a successful outcome.
