WazirX CEO advises withdrawals amid ownership dispute and hack aftermath

Nischal Shetty advises users to withdraw INR amid ownership dispute and recent $235 million hack.

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WazirX co-founder and CEO Nischal Shetty clarified some of the growing concerns around the exchange’s operations and ownership following the recent $235 million hack.

In response to questions on social media, Shetty disclosed that he is still operating the exchange “on their [owners] behalf until the dispute gets resolved.”

When asked for details about how trades are managed and how it was possible for the exchange to reverse them, Shetty cited confidentiality obligations, stating:

“I can’t get into any more particulars because of confidentiality obligations.”

Ownership dispute

WazirX’s ownership dispute notably stems from a disagreement between the exchange and Binance, which initiated an acquisition offer in 2019. The specifics of the deal were not fully disclosed at the time, leading to ambiguity about the ownership structure.

In 2022, Binance’s former CEO, Changpeng Zhao, stated that the exchange had never completed the acquisition of WazirX and claimed that Binance did not own any shares in Zanmai Labs.

However, Shetty maintains that Binance controls key operational aspects of WazirX, such as its domain name and AWS servers, though Binance disputes full ownership of the platform.

The ongoing ownership dispute, combined with the challenges posed by the asset freeze and security concerns, has led to mounting pressure on WazirX to clarify its position and restore user confidence.

Withdrawals advised

WazirX recently introduced a phased withdrawal system for Indian Rupees (INR), allowing users to withdraw up to half of their available 66% INR balance limit. It also reduced withdrawal fees by 60%.

Additionally, WazirX announced a restructuring plan earlier this month to address the fallout from the hack. However, the details of the process remain unclear, with the exchange recently stating that it was being hampered by “external parties.”

Shetty said WazirX would officially provide more information about the process next week and advised users to withdraw their funds for now.

He tweeted:

“My priority is putting people first, everything else comes second. I would suggest withdrawing your INR for now and not keeping them on the platform. You can always deposit them again later, depending on the outcome of the restructuring process.”

Shetty also clarified that the remaining 33% remained inaccessible to users due to “massive INR freezes.” He also said the timeline for crypto withdrawals remains unclear for now.

Breach

Shetty explained that the asset freeze affects a portion of the exchange’s funds, a problem he said extends to other Indian crypto exchanges as well. The issue follows a significant security breach in July, which resulted in a $235 million loss. The hack was allegedly linked to North Korean cyber actors.

The breach targeted one of WazirX’s multi-signature wallets, leading to the unauthorized transfer of funds to a non-whitelisted address. WazirX has since published a preliminary incident report and filed a police complaint.

The exchange’s report implicates both WazirX signers and its wallet management partner, Liminal, in the breach. However, Liminal disputes these claims, asserting that WazirX independently created the compromised wallet before importing it into their platform.

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