Cryptocurrency exchange WazirX has been facing a host of troubles, including a potential group complaint with the national consumer forum by mid-November for 100% restoration of clients’ portfolios.
So far, 31 victims of the July cyberattack have joined hands to file a group complaint against the exchange, seeking complete restoration of their portfolios, damages and withdrawals of assets, said Supreme Court lawyer Aman Rehaan Khan, who is appearing for the group.
“We have issued three legal notices as of now to WazirX and Zanmai Labs. We have to wait for at least another two weeks for their reply before we can file with the National Consumer Disputes Redressal Commission. Excluding damages, we have a claim of around Rs 4.5 crore so far,” Khan said.
The complaint will be filed against Zanmai Labs, WazirX’s India arm for all cash deposits, irrespective of its parent Zettai Pte’s four-month moratorium granted by a Singapore court, as the user agreement was with Zanmai, said Khan. Singapore-based Zettai is the token-holder of all cryptocurrency assets of the exchange.
“We are looking for restoration of our entire portfolio, along with enabling withdrawals of our assets. WazirX was only the custodian of our assets, we are the owners. An alleged hack on your platform is due to your negligence, making it your responsibility to compensate users or come up with some solution. You cannot just put your hands in the air and say 50% is gone. Now, we will divide among everyone the remaining 50%,” Khan said.
In September, WazirX had said that 55% of user funds could be made available to customers before this dispute is resolved, but they will lose at least 43% of their money. The exchange is undergoing a restructuring to distribute assets to users in a pro-rata, equitable way, for improving token recoveries to users.
In addition to the looming complaint, WazirX is already facing legal action from Ashish Singhal, co-founder of CoinSwitch, and another investor Javir Bains, who alleged that the hack was self-inflicted. The company has also entangled itself in a web of accusations from competitors and partners about mishandling user assets and failing to act transparently.
Addressing the concerns, WazirX emphasised its commitment to transparency. “Our focus is on transparency. That’s how we will rebuild trust among our users,” the exchange told FE. “We aim to ensure that we provide as much clarity as possible about key developments which concern our stakeholders, such as information relating to existing funds, custody and token movements,” WazirX said.
WazirX has also “released four affidavits and held three town halls where we, along with our advisors, explained to our users the ongoing procedures in detail, and answered users’ queries to the best of our abilities,” it said.
As part of the Singapore Court’s conditions to granting the moratorium, WazirX also shared an affidavit including the details of approximately 240,000 wallets with deposits, which triggered the recent round of allegations.
Singhal had raised alarm on WazirX moving more than $72 million in users’ crypto to global exchanges Bybit and KuCoin after the security breach, without informing its users. In response, WazirX co-founder Nischal Shetty said on X that funds were moved because the exchange was still in the process of onboarding a custodian.
The conflict escalated with Liminal Custody, WazirX’s former security partner, denouncing WazirX’s actions as a “disinformation campaign” to mislead users and authorities. Liminal said that WazirX continued to use its services, retaining over $175 million of user assets 75 days post-hack, with $50 million still held on their platform, despite publicly “terminating” its contract.
