The Supreme Court recently dismissed a petition filed by WazirX users following the platform’s major hack in July 2024. The hack, which resulted in the theft of Rs. 2,000 crore worth of crypto, left over 4.4 million users locked out of their accounts.
This incident, and the court’s rejection of the petition, has highlighted the glaring gaps in India’s crypto regulations, leaving users vulnerable and raising questions about the country’s ability to protect digital asset holders.
The WazirX Hack: A Blow to 4.4 Million Users
On July 18, 2024, WazirX, one of India’s largest crypto exchanges, was targeted in a massive hack that saw a significant portion of user funds stolen. Despite the exchange’s promise to restore 85% of users’ funds by May 2025, many affected users are dissatisfied with the compensation plan. This led 54 users to file a petition with the Supreme Court, seeking intervention in the ongoing restructuring process happening in Singapore, and requesting a thorough investigation into the exchange’s fund mismanagement.
Supreme Court’s Decision: A Setback for Users
The Supreme Court, led by Justice B R Gavai and Justice Augustine Masih, dismissed the petition, citing the absence of clear crypto regulations in India. The ruling underscored the limitations of the current legal framework, leaving victims of crypto hacks, such as the WazirX incident, with little recourse in the Indian legal system.
WazirX’s Restructuring Plan: Fund Recovery on the Horizon
In response to the hack, WazirX management proposed a restructuring plan to the Singapore Court, promising to restore 85% of affected user funds by May 2025. The remaining 15% will be returned over the following 2-3 years, depending on the exchange’s recovery and future profits. While the restructuring plan has received user support, the Singapore court’s approval is still pending.
WazirX Users Vote in Favor of the Recovery Plan
Despite the legal hurdles, WazirX claims that more than 93% of users support the exchange’s restructuring proposal, following a vote conducted in partnership with legal firm Kroll.
The Call for Crypto Regulation in India
The WazirX case serves as a wake-up call for India, highlighting the urgent need for a clear and robust cryptocurrency regulatory framework. While countries like the U.S. have embraced pro-crypto policies, India’s regulatory stance remains largely outdated. The WazirX hack exposes how India’s failure to adopt progressive crypto laws leaves users at risk, preventing the sector from reaching its full potential.
As the global crypto landscape continues to evolve, India risks falling behind if it does not address its regulatory shortcomings. The WazirX saga illustrates the challenges faced by users in a legal vacuum, emphasizing the need for stronger regulations to protect the growing crypto community in India.
FAQs
WazirX’s restructuring plan aims to restore 85% of the crypto portfolios for affected WazirX users by May 2025. The remaining 15% of the funds will be returned over the next 2-3 years, depending on the exchange’s recovery and future profits. This plan is part of the ongoing restructuring process being presented in the Singapore court. While WazirX claims over 93% of users support this proposal, the plan still awaits court approval.
WazirX users need to stay updated on the restructuring process, accept the plan, and possibly verify their accounts to claim their share of the 85% fund recovery.
WazirX is restoring 85% due to financial constraints after the hack. The remaining 15% will be returned over 2-3 years, depending on the exchange’s future profits and recovery.
WazirX plans to recover the remaining 15% through future profits and successful financial recovery, returning the funds once the exchange is in a better financial position.
