• Victims of the massive $230 million WazirX hack in July 2024 are a step closer to recovery as creditors greenlight restructuring plan
• The plan received resounding creditor support, passing with over 93%, and meets all legal boxes in Singapore
• The recovery strategy includes payouts, tradable tokens, and buybacks, effectively steering clear of liquidation risks

WazirX creditors have officially approved the crypto exchange’s restructuring plan, a significant move aimed at compensating users impacted by the devastating July 2024 cyberattack that resulted in a staggering $230 million in losses. The exchange garnered strong support for its “Scheme of Arrangement,” bringing them closer to potentially restarting operations and initiating the process of partial asset recovery.

Creditor Vote Details and What Happens Next

An impressive number of affected users, over 141,000, participated in the voting process, which took place via the Kroll Issuer Services platform from March 19th to 28th. WazirX reported that a substantial majority – 131,659 creditors, representing 93.1% by count and a significant 94.6% of the total claim value – voted in favor of the proposed plan. The total value of claims approved now stands at $195.65 million.

This positive outcome not only demonstrates strong creditor confidence but also fulfills the requirements outlined in Singapore’s Companies Act (majority by count and greater than or equal to 75 percent by value). Zettai, WazirX’s parent company registered in Singapore, has confirmed they will now be seeking formal sanction of the plan from the Singapore Court.

Related: WazirX Faces Make-or-Break Moment: Creditors To Decide Fate in Restructuring Vote

Proposed Recovery Strategy Explained

Assuming the court gives its approval, WazirX anticipates initiating the first round of payouts to creditors within ten business days. Furthermore, the exchange is planning a phased resumption of trading and withdrawal services, contingent on obtaining the necessary regulatory clearances.

The recovery strategy detailed in the plan includes the issuance of tradable recovery tokens to creditors. These tokens will be backed by periodic buybacks funded through the platform’s future revenue. Adding another layer to the recovery plan, WazirX also intends to launch a decentralized exchange (DEX).

Related: WazirX Quietly Moves Funds from Bybit After $1.5 Billion Hack, Users Left in the Dark

Recap: The July 2024 Lazarus Group Breach

To recall, the devastating hack that occurred in July 2024, and was attributed to the North Korea-linked Lazarus Group, was the result of a private key compromise. This security breach led to the theft of assets exceeding $230 million.

In the aftermath, WazirX pointed to failures on the part of its custody partner, Liminal. However, Liminal refuted these claims, suggesting potential vulnerabilities within WazirX’s own systems. Compounding the issue, the stolen funds were rapidly laundered through Tornado Cash, a cryptocurrency mixer known for obscuring transaction trails, making any recovery efforts incredibly challenging.

Approval Averts Potential Liquidation Scenario

WazirX had previously cautioned creditors that rejecting the proposed recovery plan could potentially force the company into liquidation. This alternative scenario would have likely meant significant delays in any potential payouts, pushing them back to 2030 at the earliest, with considerable uncertainty regarding the actual amounts creditors might recover. This strong show of support from creditors effectively avoids this worst-case outcome, at least for the foreseeable future.