WazirX Parent Calls for ‘White Knights’ to Assist in Exchange Rescue

Crypto Reporter

Shalini Nagarajan

Crypto Reporter

Shalini Nagarajan

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Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

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Last updated:

September 2, 2024 21:35 EDT

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WazirX parent firm Zettai is engaging with 11 crypto exchanges and trading firms to secure emergency funding or establish partnerships aimed at recovering the $235m lost in a July hack, the Economic Times reported Tuesday.

“We’re working to try to get potential investors, white knights, to contribute funding. Those discussions are ongoing,” WazirX co-founder Nischal Shetty said during a townhall on Monday.

Shetty and the company’s legal advisers reportedly stated that even with potential support from white knights, WazirX investors might not receive full compensation for the losses incurred due to the cyberattack.

“In crypto terms, it’s extremely unlikely that we can make people whole,” said Jason Kardachi, managing director at Zettai’s advisory firm Kroll. He added that at best, they could return between 55% and 57% of the funds.

Zettai Consults 11 Major Trading Platforms After $230M WazirX Hack

The 11 companies reportedly each handle 5.5m to 100m users and process daily transactions from $5m to $4b.

These discussions began after Zettai applied to the Singapore High Court last week for a moratorium. A major cyber attack on WazirX on July 18, which led to the theft of over $230m (₹2000 crore) in crypto assets, prompted this application.

WazirX Restructuring Process to Span Six Months As Ownership Uncertainty Lingers

Shetty further added that the restructuring process is anticipated to take a minimum of six months. This is because, he noted, there is a considerable amount of work involved in crafting the plan. It’s also necessary to take into account feedback from WazirX’s 4.3 million creditors, he said.

During Monday’s Townhall, Shetty presented a slide that highlighted the ongoing dispute between Zettai and Binance over platform ownership. Consequently, the slide noted that the unclear ownership creates ambiguity about who the contractual counterparty is for users holding crypto balances on the platform.

He explained that there are innovative ways to resolve the situation without requiring a third party to take over the platform. This approach is necessary because the ongoing ownership dispute makes a third-party takeover unfeasible.

Following the announced acquisition by Binance in 2019, Zettai, through Zanmai Labs, has been running WazirX. However, Binance’s ownership has come under public scrutiny since 2022. Currently, the contention revolves around legal battles over ownership, asset control, and operational rights, with Zettai taking charge of WazirX’s asset management during this dispute.