WazirX Says Won’t Share Past Profits With Affected Users

The WazirX exchange management vis-a-vis Zettai Pte Ltd released a “restructuring” proposal to compensate affected users on Monday, where they clarified that any previous years’ profits associated with the platform will not be shared with users. The exchange has announced compensation process on “pro-rata” basis where users are expected to take a 45% hit on their total investment in WazirX.

On Monday, WazirX management organized a townhall event on Youtube wherein they presented a restructuring scheme to their users who have lost their funds post the July 18 cyber hack that resulted in Rs 2000 crore worth of cryptocurrencies stolen from the exchange. The meeting featured WazirX’s CEO, Nischal Shetty, along with Jason Kardachi and George Gwee from Kroll.

In the townhall discussion, the WazirX management laid down the restructuring process where they clarified that “assets” of Zettai include remaining funds left on the exchange post hack, any recovered tokens from the hack, any tokens generated from profit sharing after the restructuring process is initiated and any tokens generated from collaboration under any proposed restructuring. The total assets valuation of Zettai comes around $301,787 as per WazirX.

Additionally, the exchange clarified that they have excluded tokens held for trust creditors, “ringfenced tokens”, cost fund of Rs 100 crores and profits from restructuring process. The management has refused to divulge the exact amount that doesn’t fall under the restructuring process.

The Crypto Times had earlier reported on the balance sheet of WazirX (Zettai Pte Ltd) where total revenue earned in 2022 was $108.38 Million USD approximately Rs 908 crore out of which close to $98 million USD i.e. Rs 821 crores was spent on marketing, administrative and other expenses, as per the management. The total profit shown by the management in 2022 was only $7 Million USD after sales, marketing and administrative expenses.

The announcement has caused anger among WazirX users who are questioning as to why the management is asking users to take the hit for cyber hack while they themselves refuse to share any profits with them.

Additionally, a Q&A session was conducted at the end of the meeting to address creditors’ concerns and clear up any confusion. When asked by a creditor why WazirX isn’t using the profits generated over the past few years to compensate hack victims, Nischal Shetty reiterated that WazirX was sold in 2019, and Zettai doesn’t own any of the profits.

When questioned about where WazirX’s profits were going, Nischal Shetty quickly responded, ‘Not Zettai.’ When asked if the profits were going to Binance, Shetty replied, ‘I can only speak for Zettai.'”

Zettai is currently going through a restructuring process to address the 45% asset deficit relative to its liabilities after the hack. The company has proposed a scheme of arrangement to the Singapore High Court where they need support of users to back their application. This scheme aims to distribute the available assets fairly among creditors, recover stolen tokens, and explore potential profit-sharing opportunities. 

If the Scheme passes, Creditors would receive distributions in tokens of their choice, worth 55% of their claim value in USD terms.

Also Read: Nischal’s Proposal to WazirX Users: “It’s My Way or Highway”