WazirX's Fate Hangs in Balance: Creditors Weigh Recovery Plan Amid Crypto Gains Penalty

WazirX, once India's largest crypto exchange, is facing a critical juncture as creditors decide on a recovery plan that could see up to 80% of their balances recovered. The vote, set to take place in the coming weeks, follows a Singapore High Court ruling allowing the embattled exchange to pursue a restructuring plan rather than face liquidation.

The proposed plan includes launching a decentralized exchange (DEX), issuing recovery tokens, and implementing periodic buybacks to reimburse affected users. However, the plan has sparked controversy, with many users skeptical of the five-year delay and the company's past communication failures. The recent imposition of a 70% penalty on undisclosed crypto gains in India has further complicated the decision-making process for creditors.

If the vote fails, WazirX will be forced into liquidation, a process that could take years with diminished returns for creditors. The exchange's future hangs in the balance as creditors weigh the risks and benefits of the proposed recovery plan.

WazirX's troubles began in July 2024 when hackers linked to North Korea's Lazarus Group infiltrated its systems and drained over $230 million in user funds. The hack exacerbated the exchange's already precarious situation, involving regulatory investigations and a struggle to rebuild trust. To deal with the fallout, WazirX proposed a restructuring plan to avoid outright collapse, seeking legal protection in Singapore where its parent entity is licensed.