Following a significant restructuring effort based in Singapore, the cryptocurrency exchange WazirX officially resumed operations on October 24th. However, this relaunch has been met with a wave of concern from numerous customers, many of whom are reporting substantial financial losses and difficulty freely withdrawing their digital assets.
WazirX clarified that both cryptocurrency and Indian Rupee (INR) withdrawals are available, dependent on individual user compliance status. The exchange stated that 85% of user funds have already been successfully distributed.
Additionally, all crypto-to-crypto trading pairs were reactivated and made live earlier this week.
Despite these assurances, a significant number of customers have voiced their dissatisfaction on social media platforms, including X and Telegram, claiming the current value of their crypto holdings is considerably lower than anticipated. This discrepancy is largely attributed to the inherent volatility of cryptocurrency markets, which have experienced substantial fluctuations since WazirX’s initial rebalancing of customer holdings in January.
Since the rebalancing, some digital coins and tokens have seen a surge in value, while others have plummeted. This unpredictable market behavior has left many customers feeling confused and believing they have not recovered their original investments.
Furthermore, WazirX acknowledged that approximately 34% of Indian Rupee balances remain frozen and are currently unavailable for immediate withdrawal.
A spokesperson for WazirX stated that the exchange is actively collaborating with various law enforcement agencies to freeze or hold certain assets as part of ongoing investigations into different cases.
A common complaint among users is the inability to withdraw their cryptocurrency even after the platform’s restart. This limitation may stem from WazirX’s own terms of service, as well as Indian regulations that govern the conversion and withdrawal of Indian Rupees into cryptocurrencies.
WazirX clarified that withdrawal capabilities are subject to existing limitations, especially for certain tokens like ‘Rapid Listing’ tokens. The exchange emphasized that it is standard practice among Indian crypto exchanges for withdrawals to be accessible to users who have not made INR deposits and have completed enhanced due diligence procedures.
The crypto exchange highlighted that an independent verification of its assets was conducted approximately ten months ago in January, with the assessment performed by Alvarez & Marsal Disputes & Investigations Pte Ltd.
This verification confirmed the existence, control, and quantity of Net Liquid Platform Assets, including token assets secured with BitGo across four major cryptocurrency exchanges and nine cold wallet addresses, amounting to a USD equivalent of $478.5 million as of January 17, 2025. The report also addressed Illiquid Platform Assets, which encompass stolen assets and illiquid wallet holdings. WazirX further indicated plans to undertake an independent Proof of Reserves (PoR) report.
WazirX announced that its Indian subsidiary will manage all cryptocurrency exchange operations. Key functions like crypto-to-crypto trading, user withdrawals, and technical support will be transferred to Zanmai to expedite payouts to creditors, according to the company.
WazirX also affirmed that the terms of use dictate Mumbai, India, as the designated seat and venue for any arbitration proceedings.
It’s important to recall that in July 2024, WazirX suffered a significant security breach involving a multi-signature wallet shared with Liminal, resulting in the loss of over $230 million in assets. The exchange subsequently faced considerable criticism for its slow communication with customers, the decision to freeze crypto funds post-breach, the lack of immediate compensation, and the choice to pursue restructuring through an international legal framework.
To address creditor compensation, WazirX will be issuing ‘Recovery Tokens.’ A spokesperson clarified that the company plans to acquire these tokens quarterly, based on generated profits and ongoing recovery efforts, beginning from their issuance date. They also confirmed active measures are underway to retrieve the stolen assets.