On Saturday, cryptocurrency exchange WazirX doubled down on its contentious decision to allocate INR 100 crores from user funds to cover legal costs, despite fierce criticism. The exchange, which was hacked on July 18, maintains that users should bear the financial burden of its ongoing legal battles.
Following the massive $235 million cyber hack, WazirX co-founders and their parent company, Zettai Pte Ltd, are embroiled in multiple legal disputes with third parties, including Binance, and their own customers. To address these challenges, WazirX had previously allocated $12 million (approximately INR 100 crores) to cover legal and operational expenses.
WazirX’s decision to use user funds to fight legal battles has sparked outrage among its customers, who are demanding an explanation for this move. According to an affidavit submitted by Zettai in the Singapore High Court, the exchange is facing four legal notices, in addition to its ongoing dispute with Binance, prompting users to question why their money is being used to fund these legal cases, including those initiated by fellow customers.
On Saturday, WazirX started a thread on its official X handle listing three posts to address three of the most common questions among WazirX users. In the first post, the company revealed the reason behind its moratorium application in the Singapore High Court.
“Zettai is applying for the moratorium so that it will have the breathing space to develop a solution for crypto balances. The moratorium will give Zettai time to negotiate with potential investors, which will improve user recoveries.” the post reads
In the second post, WazirX revealed in a post on X that it intends to utilize customer funds to support its legal defense, following the filing of a moratorium application in the Singapore High Court.
“The legal costs associated with the restructuring and legal proceedings are important to ensure that any restructuring will be legally binding and can be implemented in an orderly manner. There are also legal costs for ongoing legal proceedings which Zettai continues to pursue. These costs have to be funded from the assets of Zettai,” as per the official statement of WazirX exchange.
In the third one, WazirX talked about the resumption of crypto trading on its platform.
After a restructuring proposal in the form of a Scheme is approved by creditors and sanctioned by the High Court of Singapore, Zettai will be able to re-open cryptocurrency withdrawals in line with the terms of the Scheme which will take at least 6 months.
Despite WazirX’s claim that using customer funds for legal fees serves users’ best interests, the move has drawn criticism from the community.
