WazirX Faces Legal Hurdle as Singapore Court Rejects Restructuring Plan

WazirX, a prominent cryptocurrency exchange, has encountered a significant legal setback as the Singapore High Court rejected its proposed restructuring plan. This decision comes at a critical time for the exchange, which has been grappling with the aftermath of a major cyber theft incident last year. The hack resulted in the loss of approximately $230 million in digital assets, prompting WazirX to seek a restructuring plan to repay creditors and restore its operations.

The court's rejection of the restructuring plan, which aimed to repay 52% of total creditor claims using remaining liquid assets worth $284 million, has left WazirX in a challenging position. The proposal, approved by creditors, required court approval to proceed. However, the court deemed the plan invalid because Zettai, the operating entity behind WazirX, is not registered in India. This legal hurdle has forced WazirX to explore alternative legal paths, including the possibility of appealing the court's decision.

Despite this major setback, WazirX remains committed to prioritizing the distribution of user funds. The exchange has assured users that funds linked to the Non-Liquidated Pool Assets (NLPA) are safe. This focus on user fund distribution is crucial for WazirX as it navigates through its current legal and operational challenges. The company is working diligently to initiate user fund distributions as soon as possible, demonstrating its dedication to supporting its users during this difficult period.

In response to the tightening regulatory environment in Singapore, WazirX has decided to relocate its operations to Panama. This strategic move is aimed at gaining greater flexibility and operational freedom within a more lenient regulatory framework. The parent company, Zettai, has agreed to transfer control of the exchange to a new subsidiary called Zensui Corporation, which will oversee all crypto operations from Panama. This relocation is expected to provide WazirX with the necessary regulatory flexibility to continue its operations without the stringent requirements imposed by Singapore's regulatory authorities.

The decision to move to Panama comes as Singapore's regulatory rules become more stringent. The Monetary Authority of Singapore (MAS) has mandated that all crypto service providers in the region must cease offering services to foreign customers by June 30, 2025. This new regulation adds additional pressure on companies like WazirX, which primarily serve users in other countries. By relocating to Panama, WazirX aims to avoid these regulatory constraints and continue providing uninterrupted service to its global user base.

WazirX's relocation to Panama and its continued focus on user fund distribution highlight the exchange's resilience and adaptability in the face of adversity. Despite the legal setbacks and regulatory challenges, WazirX remains committed to its mission of supporting its users and navigating the complexities of the cryptocurrency sector. As the exchange explores its legal options and considers its next steps, the crypto community will be closely monitoring the developments in this evolving situation.