WazirX forms Committee of Creditors as 13% of users claim to 92% of funds

Indian crypto exchange WazirX will form a Committee of Creditors (COC) by October 9. It will treat all users with crypto balances at the time of the $230 million hack as contingent unsecured creditors. While the COC will provide feedback and monitor the restructuring process, the company is not obligated to integrate its recommendations.

Cryptopolitan calculates that only 13% of creditors hold 92% of the total claims, making only about 500K high-value claims.

WazirX will form a COC

Indian crypto exchange WazirX will form a COC, days after co-founder Nischal Shetty said “We need YOU to be a part of it.” While the intent behind the decision was to involve all user voices after the July hack, they are not content.

WazirX is considering all users with balances with the exchange at the time of the $230 million hack as contingent unsecured creditors. The parent company Zettai Pte Ltd. is also forming a Committee of Creditors (COC). The statement says that the COC will consult with the company and its advisors, provide feedback on creditor priorities, and monitor the restructuring progress. However, the COC’s role is reportedly consultative, and the company is not obligated to incorporate all recommendations in the restructuring process.

Day 78#WazirX @NischalShetty,what will the benefits of becoming members of this committee if u are not implementing any suggestions taking from COC members into this creditors restructuring scheme@WazirXIndia Do whatever u want to do,but never try to play with users feelings pic.twitter.com/5TV4eJkzYU

— Sandeep Jaswal (@iSandeepJaswal) October 3, 2024

The exchange says that the identity of each COC member will be kept secret from the general group of creditors for privacy and security reasons unless asked otherwise by the member. Once a user accepts a role in the committee, the statement adds, “COC members will need to attend COC meetings to be able to discharge their responsibilities as a COC member.” The company rules add a list of codes of conduct for COC members. For instance, inactive members will be removed from the COC. They also need to disclose any potential conflict of interest and adhere to the confidentiality policy. Meanwhile, COC members have the same scheme voting rights as general creditors.

For the formation of the COC, creditors will be segmented into tranches based on claim value. 1% of creditors from each tranche will be randomly selected for the COC.

As per the company statement, phase 1 will be completed by October 3 and Phase 2 will conclude by October 9, 2024.

The July hack reportedly impacted 40-50% of the customer funds with WazirX. Under phase 2, the exchange claims to be allowing up to 66% of the fund withdrawals to its users. Meanwhile, the company is under the 4-month moratorium granted by the Singapore courts last month. The COC is part of the conditions imposed by the court. The court mandated that the company respond to user queries and keep independence in its decisions.

WazirX users are also disappointed that the Indian government has not issued a statement on the hack despite imposing a crypto transaction tax of 30%. As per the official data of the exchange, WazirX had 16 million registered users. According to Moneycontrol, only 4.4 million users had crypto balances at the time of the hack. The recent statement confirms, “The Creditor base is presently heavily weighted by count towards low value Claims, with 87% of Creditors by count representing less than 8% of the total Claims by value.”

According to these figures, 13% of users have a claim to 92% of total funds with the exchange. Hence there seems to be only 572,000 high-value claims among the WazirX creditors at the time of the hack. ​​