After undergoing a restructuring process based in Singapore, the cryptocurrency exchange WazirX officially resumed its operations on October 24. Despite this, numerous customers have voiced significant concerns, citing unexpected and steep losses in their crypto investments and experiencing challenges with freely withdrawing their funds.
Responding to queries, WazirX confirmed that both crypto and INR (Indian Rupee) withdrawals are indeed operational, contingent on users’ compliance status. The exchange stated that 85% of users’ funds have already been distributed, and all crypto-to-crypto trading pairs became active earlier in the week.
However, user complaints continue to surface on social media platforms like X and Telegram. Many customers are reporting that the value of their crypto funds is far less than anticipated. This discrepancy is largely attributed to the inherent volatility of cryptocurrency prices, which have seen considerable fluctuations since WazirX’s customer holding rebalancing process was conducted in January.
While some digital coins and tokens have rallied since the rebalancing, others have experienced significant downturns. This market movement has created widespread confusion among users, many of whom feel they have received substantially less value than their initial investments.
Adding to the concern, WazirX acknowledged that approximately 34% of INR balances are currently frozen and cannot be withdrawn immediately. A spokesperson explained, “WazirX is working in collaboration with various law enforcement agencies (‘LEAs’) to freeze or hold assets based on their investigations of various cases.”
Some users are also reporting an inability to withdraw their crypto assets, even after the exchange’s restart. This situation may be influenced by WazirX’s specific terms and conditions, as well as Indian regulations that can impose restrictions on converting Indian rupees to cryptocurrencies for withdrawal.
WazirX clarified: “The ability to make a withdrawal is subject to any prevailing limitations of withdrawal of certain tokens such as Rapid Listing tokens. It is a common practice amongst crypto exchanges in India; withdrawals will be open for users who have not made INR deposits and who have completed enhanced due diligence.”
The exchange also highlighted that it completed an independent verification of its assets in January of this year. This assessment, conducted by Alvarez & Marsal Disputes & Investigations Pte Ltd, verified the existence, control, and quantity of Net Liquid Platform Assets, including token assets held with BitGo, across four major cryptocurrency exchanges and nine cold wallet addresses. This amounted to a total USD equivalent of $478.5 million as of January 17, 2025. The verification also covered Illiquid Platform Assets, which include stolen and illiquid wallet assets. WazirX plans to release an independent Proof of Reserves (PoR) report in the future.
Furthermore, WazirX confirmed that its Indian entity will oversee the complete crypto exchange operations. Key activities, such as crypto-to-crypto trading, user withdrawals, and technical operations, will be transitioned to Zanmai to ensure prompt payouts to creditors. The company also stated that the seat and venue of arbitration, as stipulated by the Terms of Use, will be Mumbai, India.
It’s important to recall that in July 2024, WazirX suffered a security breach involving a multi-signature wallet it managed with Liminal, resulting in the loss of over $230 million in assets. This incident drew significant criticism regarding the company’s delayed communication with customers, the decision to lock crypto funds post-breach without immediate compensation, and the choice to pursue restructuring through a foreign legal system.
A WazirX spokesperson noted, “In order to compensate creditors, we are issuing Recovery Tokens. WazirX will purchase Recovery tokens based on profits and recovery efforts every quarter, starting from the date of issue of RT tokens.” The company also affirmed its ongoing efforts to recover the stolen assets.