The last month has been a difficult time for users of the WazirX platform due to the cyberattack on 18 July 2024 and the subsequent suspension of withdrawals and trading to mitigate impact to the platform. We apologize for this delay which has been necessary to assess the situation and establish credible next steps to optimize a resolution for users. 

Over the last few weeks, the WazirX team has been working tirelessly with its partners to work out a plan and we are pleased to inform all users of next steps to address the two main user concerns: cryptocurrency balances and INR balances. 

Cryptocurrency Balances

While we regret that users have not been able to make withdrawals of cryptocurrency from their account on the platform for some time, it is not possible to simply resume cryptocurrency withdrawals.

Due to the cyberattack and loss of a significant balance of ERC-20 tokens as a result of the theft, there are insufficient token assets available to meet the liabilities arising from the token balances owing to users of the platform.

The nature of the cyberattack means that there will likely always be a mix of users who support and oppose various outcomes. The key to being able to resume cryptocurrency withdrawals in an equitable way is to do so as part of a legally binding solution agreed to and approved by users in line with legally defined voting thresholds.

We have decided to pursue a Singapore Scheme of Arrangement to facilitate an equitable and user-approved distribution of cryptocurrency assets pursuant to a Scheme. A Scheme is a necessary step to ensure that users of the platform are treated fairly and in line with user preferences so that the outcome remains legally binding on all relevant parties.

While this legal process will be driven by us and our advisors, ultimately users will be able to vote on and approve a restructuring proposal before the Scheme is effective – this means that users will be kept updated on all material developments and your opinions understood via polls and town halls to ensure that the proposed restructuring captures what users want.

INR Balances

After a careful assessment and understanding of all user feedback, we are pleased to announce that the suspension on withdrawals of INR balances will be lifted on 26 August 2024, and INR withdrawals will be enabled in phases. 

To make it easier for more users to withdraw INR, we are also reducing withdrawal fees by 60% – from INR 25 to INR 10.

While the operating entity for INR-related activities, Zanmai Labs Pvt Ltd (“Zanmai”), on the WazirX platform was not affected by the cyberattack and has sufficient INR reserves to cover all INR user balances, not all of these balances are currently available for withdrawal. Due to ongoing disputes, and certain investigations by various law enforcement agencies (“LEAs”) which is assisting with (and it is not a target of such investigations), ~34% of INR balances are currently frozen and are not immediately available for withdrawal. 

As a result, starting from 26 August 2024 (next Monday), all eligible users with INR balances will be able to withdraw up to ~66% of their INR balances as reflected on the WazirX platform in phases:

• From 26 August – 8 September 2024, users will be able to withdraw up to half of the present ~66% limit of their INR balances; and
• From 9 – 22 September 2024, users will be able to withdraw up to the full ~66% limit of their INR balances.

We want to assure all users that Zanmai is not the target of any investigations that have led to the freezing of INR balances. The funds were frozen by LEAs as a precautionary measure while they pursue their investigations against third parties. All INR balances remain secure and will be made available for withdrawal once the respective investigations and disputes are concluded. While the timeline for the release of these frozen INR balances is currently unclear, we want to reassure you that we are doing everything in our power to expedite this process for the benefit of our users.

Next Steps

We will shortly be filing an application in the High Court of Singapore to ensure that the platform has the time and breathing space it needs to pursue a restructuring under a Scheme of Arrangement. Concurrently, INR withdrawals will be made available in phases. We will be providing users with further updates in the coming days – watch this space!

Cryptocurrency Balances FAQs:

Q: What is a Singapore Scheme of Arrangement?

A: A Scheme of Arrangement is a corporate rescue and restructuring mechanism set out under the Insolvency, Restructuring and Dissolution Act (2018, “IRDA”) of the Singapore regulatory framework. Through a Scheme, a company can put forward a proposal to its creditors to restructure its debts and deliver stronger recoveries to creditors than under a liquidation subject to creditor approval and Court sanction. 

A creditor-approved and Court-sanctioned Scheme will be legally binding on both the company and its creditors, and the IRDA sets out clear timelines, requirements and Court processes to ensure that creditors have enough information to make an informed decision on the proposed terms.

Q: Why are only cryptocurrency balances being restructured? Why are INR balances not also being restructured?

A: Zanmai’s management has determined that Zanmai has sufficient assets to meet the liabilities owing to users of the platform in respect of their INR balances, although some of them are currently frozen. As such, INR withdrawals are being re-opened in phases. 

On the other hand, there are insufficient cryptocurrency token assets available to meet liabilities owing to users of the platform in respect of their cryptocurrency balances as a result of the cyberattack on 18 July 2024.

INR Balances FAQs:

Q: Why did it take so long to resume INR withdrawals?

A: We apologise for the delay, which was essential to thoroughly assess the financial impact and legal implications of the cyberattack. Based on our findings so far, we are able to proceed with resuming INR withdrawals (in phases), as requested by many of our users.

Q: Why can’t I fully withdraw all my INR now?

A: While Zanmai has sufficient INR reserves to cover all INR user balances, ~34% of these INR balances are currently frozen due to ongoing disputes, and certain investigations by LEAs (none of which are directly against Zanmai). As a result, ~66% of INR balances are currently available for withdrawal.

A large part of the INR freeze happened when the Platform allowed users to withdraw their cryptocurrency token balances to any wallet of their choice.

In such cases, users would have deposited INR, bought cryptocurrency tokens with INR and withdrew their cryptocurrency token balances. At a later date, LEA investigations led the INR trail of these users who are the target of these investigations to Zanmai’s bank account (into which the user had deposited their INR) and LEA froze Zanmai’s bank account. However, at the time of the freeze, these users already had conducted the INR to cryptocurrency trades, withdrew such cryptocurrency token balances and no longer had any INR balances in their account. We have provided the LEA with the crypto wallet addresses to which the cryptocurrency tokens was transferred. We’re pursuing these matters and working on getting these freeze on Zanmai’s bank accounts lifted.

We are fully cooperating with these investigations, and once the frozen funds are released, they will be made available for withdrawal.

Q: When can I fully withdraw all my INR?

A: At this stage, it is unclear when the on-going disputes and LEA investigations will conclude, which will allow the release of the remaining INR balances. However, we are making every effort to expedite this process for our users and will keep you updated of any significant progress.

Q: How do I withdraw my INR?

A: You can follow the instructions on this link.

Q: When will I be able to receive my INR balances?

A: ~66% of your INR balance will be available for withdrawal in phases starting on 26 August 2024:

• from 26 August – 8 September 2024, users will be able to withdraw up to half of the present ~66% limit of their INR balances; and
• from 9 – 22 September 2024, users will be able to withdraw up to the full ~66% limit of their INR balances.

The remaining ~34% will be made available for withdrawal once the on-going disputes and LEA investigations are resolved, and the remaining funds are released.

Q: Will I be able to withdraw INR resulting from trades carried out after the Withdrawal Freeze (18 July 2024, 1pm IST) and the Trading Freeze (21 July 2024, 8.30pm IST)?

A: As announced on 8 August 2024, all trades (including trades involving INR) conducted after the Withdrawal Freeze will be undone.

Users will be able to withdraw up to ~66% of the INR balances that were in their accounts at the time of the Withdrawal Freeze. 

Q: Will I be able to fully withdraw my entire remaining INR balance once the investigations conclude and the frozen funds are released?

A: At present, we do not anticipate that all frozen INR balances will be released at the same time, as there are multiple ongoing investigations and disputes. It is likely that some frozen INR balances may be released before others. We will update users when we are in a position to allow further withdrawals.

Q: How does withdrawing INR affect my cryptocurrency balances?

A: Withdrawing INR does not affect your cryptocurrency balances.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.