Key Insights:
WazirX moves $75 million in crypto to global exchanges beyond the jurisdiction of Singapore and Indian authorities.
The transfer takes place without any notice to customers.
WazirX has been granted a four-month moratorium in the Singapore High Court to help in the recovery of hacked funds.
To date, there has been no success in even identifying hackers.
Courts in India have also issued notice to the exchange as it has over 94% Indian customers.
In a mysterious move, WazirX was caught transferring $75 million in crypto to global crypto exchanges Bybit and KuCoin amid restructuring proceedings in Singapore and legal investigations in India.
The company was left struggling to recover after a hack drained $235 million in funds on 18 July 2024 from its hot wallet.
Further, the hackers were also able to launder all of the stolen crypto via Tornado Cash, a banned crypto mixer that erases the link between crypto funds and their owners. This made it almost impossible for the authorities to tie the hackers to the hacked funds even if their identities were revealed.
To make matters worse, to date, no hacker has been identified in the exploit.
Further, the exchange also triggered a serious outrage after it proposed that users of the exchange may have to permanently book the losses without any hope for recovery.
WazirX has also been undergoing significant restructuring proceedings in Singapore. The exchange sought a six-month timeline from the courts but could only secure a four-month timeline.
The Singaporean courts have granted the moratorium period to aid WazirX in its recovery efforts, failing which there could be compulsory restructuring in the company and it may even see liquidation.
WazirX has been searching desperately for a rescuer who can help the company financially. It claimed to have been in talks with 11 companies that could provide it with financial means to recover from the hack.
WazirX customers approached the Delhi High Court to seek some relief, prompting the courts to send notices to Indian regulators (FIU and ED) and WazirX.
Almost 94% of WazirX holders are Indian.
Among the affected was another Indian crypto exchange CoinSwitch which claims to have lost $9.6 million in the hack. In a statement, CoinSwitch said that they do not have any other option to recover funds except suing WazirX.
Several X users have pointed out the mysterious transfer of $75 million to global exchanges flagging it as siphoning of funds. The funds are now outside of Indian and Singaporean jurisdictions.
Interestingly, they could have been seized by the Singaporean High Court if WazirX failed to make any progress in crypto recovery. This prompted users to claim that the move was aimed at siphoning funds.
The exchange was earlier caught red-handed submitting falsified user data of around 240k wallets to the Singaporean courts which was exposed by several X users.
WazirX had always claimed that the exchange was owned by Binance with the latter acquiring it in 2019.
However, Binance later disputed this claim and said that the acquisition was limited to some limited operational activity and Binance did not acquire any equity on WazirX.
WazirX disputed this claim and said that Binance had indeed acquired WazirX and his company Zanmai Labs was only limited to operating crypto-INR pairs.
The dispute dates back to 2021 when the issue came out as an ugly fight between Binance co-founder Changpeng Zhao and WazoirX co-founder Nishchal Shetty.
After the hack, WazirX got into some serious controversy as the exchange signalled that the users might have to book the losses permanently resulting from the hack.
It was estimated that the users might have to suffer 47% in permanent losses.
This triggered an outrage, and the company had to remove this suggestion.
Navodaya Singh Rajpurohit, Co-founder of CoinQue Consulting states that,
"It appears from Mr. Ashish Singhal’s tweet this morning that approx 75 million worth of assets were transferred to ByBit and Kucoin by Wazirx. Assuming that Wazirx has transferred funds to Kucoin and ByBit after the hack while they have been publicly claiming otherwise, the restructuring court in Singapore should draw adverse inference against Zettai for not disclosing the same before the court. Further, this would also cast a doubt on all the other public statements and court disclosures made by Zettai/ Wazirx and strengthen the users demand of an independent investigation on cyberattack."
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