WazirX Court Approval Unveils Crypto Custody Crisis in Post-Hack Recovery

Singapore's High Court has approved WazirX's debt restructuring plan, marking a pivotal step in the Indian cryptocurrency exchange's recovery after a $234 million hack in July 2024WazirX Secures Court Approval for Debt Restructuring Plan^[1]. The ruling, announced on October 13, 2025, follows a revised proposal that secured 95.7% support from voting creditors in an August 2025 revoteWazirX moves to repay users as Singapore court approves recovery plan^[2]. The court-sanctioned plan allows WazirX to resume operations within 10 business days, with a structured repayment process for users who lost access to their funds following the breachWazirX Users to Reclaim $235M After Court Restructuring Approval^[3].

The hack, attributed to North Korea's Lazarus Group, exploited vulnerabilities in WazirX's multisignature wallet system, draining assets and freezing user accountsWazirX News: Singapore Clears Plan for Restart, Bringing^[4]. The exchange's initial restructuring plan was rejected in June 2025 due to procedural flawsCrypto News: WazirX Gets Go-Ahead To Restructure From Singaporean Court After $234M Hack^[5], prompting a revised scheme that emphasizes creditor protections and a phased repayment model. Under the approved plan, users may recover 75% to 80% of their account balances at the time of the hack, with distributions beginning via stablecoins and recovery tokensSingapore Court Approves WazirX Restructuring Plan^[6].

Nischal Shetty, WazirX's founder, hailed the court's decision as a "key milestone," noting the platform's "one of the fastest restructurings in the global crypto industry"WazirX Refund & Fund Recovery (2025): Eligibility, …^[7]. The restructuring, however, faces lingering legal challenges, including disputes over asset recovery and cross-border compliance. For instance, the Bombay High Court recently ordered WazirX's Indian subsidiary, Zanmai Labs, to provide a bank guarantee for CoinSwitch's claim to $5 million in frozen assetsWazirX moves to repay users as Singapore court approves recovery plan^[8].

The court approval also highlights broader structural risks in crypto asset custody. Investigations revealed that attackers exploited weaknesses in WazirX's wallet management protocolsSingapore Court Greenlights WazirX Plan After $234M Hack^[9], a cautionary tale for India's rapidly expanding but loosely regulated crypto sector. While the exchange has since upgraded its security measures, rebuilding user trust remains a critical challenge. Many users, frustrated by delays, have called for transparent communication and expedited withdrawals ahead of India's Diwali festivalAfter $234M Hack, WazirX Gets Court Approval For Major Rebuild^[10].

Market reactions to the news were mixed. WazirX's native token, WRX, surged 21% following the court rulingWazirX Users to Recover Funds After Court Approval^[11], while critics remain skeptical about the long-term value of recovery tokens. The plan's success will depend on timely fund disbursements and WazirX's ability to navigate regulatory hurdles in both Singapore and IndiaWazirX Wins Court Nod to Repay Users After $234M Hack^[12].

With operations expected to restart by late October, the court-approved restructuring offers a path to partial recovery for WazirX's 6.6 million users. Yet, as one analyst noted, "transparency and timely execution will be key in restoring trust within the community". The coming months will test whether this legal victory translates into a sustainable recovery for the embattled exchange.