In the wake of a major cyberattack in July 2024, WazirX, one of India’s leading cryptocurrency exchanges, has embarked on an ambitious restructuring plan aimed at ensuring swift repayment to its creditors. If approved, the scheme could see repayments begin as early as April 2025. However, the success of this initiative hinges on a crucial vote—at least 75% of creditors must back the proposal. If the scheme fails to gain sufficient support, creditors may be forced to wait until 2030 for any potential fund recovery.
The Shadow of Crypto Bankruptcies
The cryptocurrency industry, once heralded as the future of finance, has faced repeated turmoil, with several high-profile collapses leaving investors and creditors trapped in years-long legal battles and uncertainty. The slow pace of restitution in past cases underscores the critical importance of timely action.
FTX: 830 Days of Waiting
FTX, a former titan in the cryptocurrency space, filed for bankruptcy on November 11, 2022. The collapse was exacerbated by a simultaneous hack that further complicated asset recovery. Creditors have endured an excruciating wait, with repayments only expected to begin on February 18, 2025—830 days after the company’s downfall.
Celsius Network: A Two-Year Ordeal
Celsius Network, another major crypto lending platform, entered bankruptcy on July 13, 2022. Its restructuring plan involves distributing over $3 billion in cash and cryptocurrency, alongside equity in a newly formed Bitcoin mining company, Ionic Digital, Inc. However, the prolonged recovery process has left many creditors disillusioned.
Mt. Gox: A Decade of Frustration
Mt. Gox, once the world’s largest Bitcoin exchange, collapsed in February 2014 after losing approximately 850,000 Bitcoins due to hacking and mismanagement. Creditors have spent more than ten years awaiting restitution, making it one of the longest-running financial sagas in cryptocurrency history.
A Different Path for WazirX
Against this backdrop of extended legal wrangling and financial distress, WazirX’s restructuring scheme presents a rare opportunity for creditors to recover their assets far more swiftly. Unlike past crypto collapses, where investors were left in limbo for years, WazirX’s plan aims to reallocate net liquid assets, distribute profits from a proposed decentralized exchange, and actively recover illiquid assets. Additionally, the exchange has committed to resuming full crypto withdrawals by mid-April 2025—offering a significantly reduced waiting period for affected parties.
The choice before WazirX creditors is stark. A ‘yes’ vote to the restructuring scheme means a potential recovery within months, while a ‘no’ could extend the waiting period by another five years. Given the precedents set by FTX, Celsius, and Mt. Gox, the decision could prove pivotal in safeguarding creditor interests in the ever-volatile world of cryptocurrency.
