Indian cryptocurrency exchange WazirX has introduced a recovery plan that could return 85% of lost funds to users by April 2025. The plan has drawn praise from Sunil Kavuri, a well-known FTX creditor activist, who called it “far superior” to liquidation.
Kavuri, speaking to TheStreet Crypto, highlighted the plan’s potential to set a new standard for recovering user funds in the crypto industry. “The proposed recovery token by WazirX for their customers due to the $230 million hack is far superior to liquidation,” he said. He also contrasted WazirX’s approach with the slow and frustrating recovery processes of other failed exchanges like Mt. Gox and FTX, describing it as a “beacon of hope” for affected users.
How WazirX Plans to Recover User Funds
In 2024, WazirX suffered a $230 million hack, leaving its users in financial limbo. Instead of opting for liquidation, the exchange proposed a court-approved restructuring plan, known as the Scheme of Arrangement. If approved, the plan will allow WazirX to begin distributing recovered assets to users as early as April or May 2025.
Central to the plan is the introduction of a Recovery Token (RT). These tokens will be tied to WazirX’s future profits, enabling users to recover their losses over time. The exchange has promised to distribute funds within 10 business days of the plan’s approval, offering a faster resolution compared to other high-profile crypto collapses.
A Faster Recovery Timeline Than FTX, Mt. Gox, and QuadrigaCX
The crypto industry has seen its share of prolonged recovery efforts following exchange collapses. FTX, which filed for bankruptcy in November 2022, has yet to repay its customers. A court ruling expected in early 2025 may finally initiate repayments—more than two years after the collapse.
Mt. Gox, a Bitcoin exchange that went under in 2014, still hasn’t reimbursed all its creditors. Repayments have been delayed until late 2025, marking an 11-year wait for users.
Similarly, Canada’s QuadrigaCX collapsed in 2019 after its CEO’s sudden death left $190 million inaccessible. Recovery efforts remain incomplete, with customers still waiting for full reimbursement.
In contrast, WazirX’s plan sets a clear and relatively short timeline. If approved, users could begin receiving funds by April 2025, avoiding the years-long delays that have plagued other exchanges.
Why Recovery Tokens Are a Better Option
Kavuri strongly supports the use of recovery tokens like WazirX’s RT, arguing that they provide a better solution than liquidation. ““Exchanges are extremely profitable, and a profit-sharing recovery token for WazirX users would be the best outcome for all parties involved” he said. Liquidation, he noted, often destroys value and leaves users with only a fraction of their original investment.
The success of WazirX’s plan hinges on user approval. Voting is scheduled from March 19 to March 28, with creditors needing to meet a 50% majority and 75% by value for the plan to proceed. If users reject the proposal, they risk significant delays in fund recovery and may receive distributions in Indian Rupees (INR) instead of cryptocurrency, eliminating the potential for future price appreciation.
What’s Next for WazirX Users?
WazirX’s recovery plan not only promises a faster and more transparent resolution but also ensures users benefit from the exchange’s future success. By tying the Recovery Token to profits, the plan allows affected users to regain value over time while the exchange resumes operations.
Nischal Shetty, co-founder and CEO of WazirX, has urged users to vote in favor of the plan. “Vote ‘yes,’” he said, emphasizing the importance of collective action to make the proposal a reality.
If approved, WazirX could set a precedent for how exchanges handle crises while prioritizing user recovery. The March vote will determine whether the plan moves forward, offering users a chance to reclaim their financial future.
Source: The Street Roundtable
