Legal advisers for WazirX, the cryptocurrency exchange that suffered a major hack in July, have indicated that it is highly unlikely customers will recover their full holdings in crypto terms through the ongoing restructuring process. During a conference call with journalists, including WazirX co-founder Nischal Shetty, advisers projected that customers could lose at least 43% of their funds.
Best Case Scenario: Partial Recovery
George Gwee, a director at restructuring firm Kroll, stated that under the best-case scenario, customers might recover between 55% and 57% of their lost assets. This estimate comes ahead of a Singapore High Court hearing on Tuesday, where WazirX will seek six months’ protection as it attempts to restructure its liabilities after losing $234 million—around 45% of customers’ funds—during the hack.
Efforts to Reduce the Gap
Nischal Shetty emphasized that these figures are based on the current situation as of Monday, but efforts are underway to improve the recovery rate. “We’re in the negotiation and ideation stage,” Shetty explained. “Over the next several weeks, it will become clearer how we can address the gap.”
Jason Kardachi, Kroll’s managing director, acknowledged the challenges of making customers whole in crypto terms. He suggested that any recovery beyond the projected figures would likely depend on factors such as improved profitability, contributions from potential “white knights,” or the recovery of stolen funds. However, Kardachi was cautious, stating, “It’s extremely unlikely that we can make people whole in crypto terms.”
Potential Impact of Market Conditions and Ownership Dispute
Kardachi also noted that if the crypto market improves, customers could recover more of their investments in dollar terms rather than crypto terms. However, he downplayed the likelihood that white knight contributions or other financial inflows would completely bridge the gap.
Complicating the situation further is the ongoing ownership dispute between WazirX and Binance, the world’s largest cryptocurrency exchange. While Shetty and the legal team declined to comment on this issue due to confidentiality agreements, Kardachi mentioned that 55% of the funds could potentially be made available before the dispute with Binance is resolved.
