WazirX’s $230M Payout Plan Hinges on May Court Ruling—Liquidation Looms if Rejected

Key Takeaways:

• If the WazirX payout is approved, creditors get paid faster. Rejection could lead to liquidation.
• Multisig wallets are becoming a growing threat to crypto exchanges, with Bybit as the most recent target.
• India’s new tax regime has pushed millions of users to foreign platforms.

In a recent statement, WazirX, the India-based crypto exchange that suffered a massive hack last year, disclosed plans to restart its operations and begin payouts to affected users. A major court hearing will take place in mid-May in Singapore to decide on WazirX’s restructuring and user compensation plan.

In an X post on April 21, the WazirX crypto exchange provided an important update on its path to recovery. The exchange’s parent company, Zettai, confirmed that all required steps leading up to the next stage have been completed.

The next key moment is May 13, 2025, when the Singapore High Court will hold a hearing to decide whether WazirX’s proposed payout plan can proceed.

FAQ: What’s the current update on the restart of WazirX operations?

A: We understand the eagerness around the platform restart and truly appreciate your continued patience. Since the beginning, we have communicated that the First Distribution and restart would occur within the… pic.twitter.com/VJtfX4EBLh

If the court approves the restructuring plan, the exchange promises to begin payouts within 10 business days from the effective date of the court order.

The court case is being handled in Singapore because Zettai, WazirX’s parent company, was incorporated there.

The approval of the restructuring plan was initially granted in January 2025.

The plan seeks to launch a decentralized exchange and issue recovery tokens to WazirX creditors’ recovery while avoiding liquidation through a court-supervised process.

But there could be a darker side. The exchange had earlier warned that if the court rejects the scheme, WazirX creditors could face years of waiting. Their funds could potentially be tied up until 2030.

In a worst-case scenario, the exchange may enter liquidation, reducing the amount WazirX creditors can recover because assets would be sold quickly at below-market prices.

Administrative costs would also drain funds, and unsecured creditors would receive payouts only after secured parties.

Delays could lead to the loss of value in the recovered assets, meaning WazirX creditors might not get the full amount they are owed.

WazirX’s current legal troubles stem directly from the major security breach it suffered in July 2024.

In that incident, hackers exploited a vulnerability in the exchange’s multisig wallet system, manipulating the interface to trick authorized signers into approving a malicious smart contract upgrade.

This allowed the attackers to bypass established security measures and drain approximately $230 million in crypto assets from WazirX wallets.

Update: We're aware that one of our multisig wallets has experienced a security breach. Our team is actively investigating the incident. To ensure the safety of your assets, INR and crypto withdrawals will be temporarily paused. Thank you for your patience and understanding.…

What happened to WazirX isn’t unique. Similar attacks have hit other platforms, which shows a common vulnerability in the multisig wallet model.

For example, in early 2025, Bybit became the target of a multisig exploit, where attackers compromised the wallet’s front-end interface to steal $1.46 billion.

Radiant Capital, another victim, fell prey to a “blind signing” attack in late 2024. Fraudulent transactions were approved by users who unknowingly authorized them.

~$58,000,000 Exploit Alert

Radiant Capital contracts were exploited on BSC & ARB chains with the 'transferFrom' function, which allowed to drain users' funds, namely $USDC $WBNB $ETH and others

Revoke approvals ASAP
0xd50cf00b6e600dd036ba8ef475677d816d6c4281 pic.twitter.com/oUHyshwEmL

According to a recent Hacken security report, multisig wallets were the primary target for cybercriminals between the third quarter (Q3) of 2024 and the first quarter (Q1) of 2025, outpacing other types of attacks.

The reason is simple. Flaws in implementing multisig wallets and inadequate transaction verification processes leave them vulnerable to exploitation.

While WazirX’s restructuring plan offers hope, the outcome still hinges on the court’s decision. This uncertainty is compounded by the lack of positive developments in India’s crypto sector.

For instance, Mudrex, an Indian crypto investment platform, halted withdrawals in January, citing efforts to upgrade its compliance systems.

In addition to these challenges, India’s tax laws continue to create barriers for crypto investors.

The Income Tax Bill 2025, introduced in February, retains the country’s 30% tax on profits from trading, selling, or transferring Virtual Digital Assets (VDAs).

Additionally, the 1% Tax Deducted at Source (TDS) on crypto transactions exceeding $120 remains in effect, placing a financial burden on traders.

After the implementation of the 1% TDS in July 2022, between three to five million crypto investors migrated to offshore platforms. As a result, India’s government lost an estimated $420 million in potential tax revenue.

These policies have already led to a high outflow of crypto users to foreign exchanges.

If WazirX’s legal troubles continue and India’s crypto tax remains rigid, foreign exchanges could see an influx of Indian users looking for safer and more lucrative investment options.

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