Nearly a year after an alleged cyber robbery that resulted in the loss of $235 million in virtual digital assets, the Singapore High Court (HC) on 5 June dismissed the planned restructuring plan of WazirX’s parent company, dealing a serious blow to cryptocurrency traders on the exchange platform.
The parent business Zettai’s plan of arrangement was revoked just weeks after Zensui Corporation, a subsidiary, was established in Panama. According to those acquainted with the case, the court’s decision was spurred by the company’s failure to disclose this incorporation data during the restructuring process.
According to an affidavit filed with the Singapore court and examined by Business Standard, Zensui was formed on March 10 of this year. Furthermore, the business stated that Zettai has no plans to apply for a Singaporean digital token service provider (DTSP) licence.
Additionally, it stated that neither the parent company nor its Panama subsidiary planned to submit an application to register with the Financial Intelligence Unit-India (FIU-IND).
In a post on X, WazirX stated that the Singapore High Court had issued a ruling rejecting our suggested reorganisation plan. Although this result was not what the brand had hoped for, it respects the court’s ruling and is still totally committed to following all legal and regulatory procedures.
WazirX May Appeal Against the Recent Order
According to a recent report that cited comments from company management, the digital currency exchange may file an appeal against the most recent ruling made by the Singaporean court.
Laws in Singapore mandate that DTSPs, who must obtain a licence there, suspend or stop conducting business outside the island nation by June 30.
The delay in allocating available assets to creditors could be exacerbated by the company’s setback. According to Navodaya Singh Rajpurohit, founder of Pravadati Legal and legal partner at Coinque Consulting, Zettai also neglected to notify users or the court about the March 10 incorporation of its subsidiary Zensui and an agreement to transfer cryptocurrency assets to Zensui.
In order to distribute cryptocurrencies legally in India, Zettai disclosed that it does not plan to register with FIU-IND, he continued. “The scheme was not viable and lacked transparency due to these omissions and regulatory non-compliances,” he stated.
WazirX’s Explanation in Court
The company stated in the affidavit that one of the reasons it did not intend to apply for the DTSP licence was because of the Financial Services and Markets Act 2022.
The Act did not pose any practical or legal obstacles to Zettai carrying out the first distribution or permitting withdrawals in line with the scheme of arrangement.
According to a media report, since the holding was with Singapore, the Panama subsidiary was in charge of the bitcoin linked to redistribution. It was a stopgap measure because, after June 30, the company hoped to relocate to a country where it could adhere to rules and regulations.
Months after the firm requested restructuring in the Singapore High Court, Zettai reported in April that 93.1% of eligible voting creditors, or 94.6% of the total value of claims, voted in favour of the plan. Voters were 141,476 scheme creditors, representing approved claims totalling $195.65 million. 131,659 investors, or $184.99 million, of the whole creditor base supported the plan.
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