WazirX, a cryptocurrency exchange, recently announced its restructuring plan with Kroll, an international restructuring firm. This move has raised concerns among creditors, who fear a repeat of the mistakes made by Vauld, another cryptocurrency exchange that went through a failed restructuring process a couple of years ago. The similarities between the two cases have sparked speculation about mismanagement, lack of transparency, and the long-term implications for creditors.
The restructuring plan carried out by Vauld, led by Darshan Bathija and assisted by Kroll, did not sit well with creditors. The plan involved locking token values during a market downturn, which led to high recovery rates for Kroll and Vauld once the market rebounded. However, Vauld inflated its refund amount to creditors from $100 million to $200 million during a market spike, concealing the actual losses incurred.
In addition to the misrepresented refund amounts, Vauld’s creditors also faced other issues. Claims for real token value decreases were discouraged, audits were nonexistent, and funds lost to hacks prior to insolvency – estimated at $6-$8 million – remained unrecovered. This situation further fueled resentment among creditors and highlighted the mismanagement of funds by Vauld.
Following in the footsteps of Vauld, WazirX has also chosen to restructure with Kroll, a decision that has left creditors skeptical. CEO Nischal Shetty’s proposal for restructuring has once again brought Kroll into the picture, raising questions about whether the firm will accurately assess the extent of the issues at WazirX and whether the exchange will continue to present minimal gains as significant victories to its users.
As WazirX moves forward with its restructuring, it is crucial for the exchange to address the concerns of its creditors, who are seeking more transparency, accountability, and efforts to reclaim lost funds. The comparison between Vauld and WazirX underscores the importance of providing creditors with the information and support they need during the restructuring process, in order to avoid the disappointment and distrust that plagued Vauld’s users. By prioritizing the interests of its creditors, WazirX can navigate its restructuring more effectively and earn back the trust of its user base.
