WazirX announced that it has filed an application with the High Court of Singapore for a moratorium under section 64 of the Insolvency, Restructuring and Dissolution Act 2018 to facilitate its intention to restructure its liabilities under a scheme of arrangement. In the same blogpost, the crypto firm indicated that it has firmly gone back to its earlier plan to socialise losses in the order of $230 million amongst its customers.
This application for the moratorium was filed on August 27 by WazirX’s largest shareholder Zettai Pte Ltd. According to the blogpost, the moratorium will give the crypto firm the necessary breathing space to facilitate “asset restructuring” as well as facilitate recovery of the assets lost in the cyber breach, which occurred on July 18.
As per Singapore Law, WazirX gets an automatic moratorium of 30 days from filing the application as of August 27. In the meantime, the Singapore Court will determine whether to grant the moratorium after hearing the application as well as the duration of the moratorium, if so granted. The hearing date is not yet scheduled at the moment.
- Also read: WazirX claims multi-sig wallet manager Liminal compromised security resulting in cyber attack
Socialising losses
WazirX, in effect, is seeking legal sanction from the Singapore High Court to approve their earlier scheme of socialising losses. “We anticipate that under a planned restructuring, the impact from the cyberattack will be allocated pro-rata across users who rank equally with each other as unsecured creditors, and users will receive a share of available token assets associated with the platform proportionate to their share of all users’ unsecured claims for their account balances.“
This comes after WazirX’s proposal to redistribute losses amongst affected and unaffected wallets on its crypto trading platform received immense pushback from its customers. Under the socialising scheme, customer wallets would be getting a 45 per cent cut even if their tokens were not affected by the July 18 cyber breach. The crypto firm had to backtrack from this scheme after customers vehemently opposed this in a poll conducted by the crypto firm.
”This restructuring of assets will be accompanied by mechanisms to increase these token recoveries, such as tracing and recovery of stolen tokens, the implementation of revenue-generating products and profit-sharing mechanisms, and potential opportunities for third-party partnerships, all of which will benefit users,“ WazirX added.
This scheme, if approved by the creditors and sanctioned by the Singapore Court, would be legally binding on all relevant parties, including Zettai. It is envisioned that Zettai will need at least six months to consider the terms of the restructuring plan and work with the relevant stakeholders, according to WazirX.
WazirX along with its advisors will be holding a town hall on September 2 to explain the key features of the moratorium.