Embattled crypto platform WazirX has entered an initial 30-day moratorium following a $234 million hack in July, pending a decision by Singapore’s High Court on whether to grant an extension, according to an Aug. 28 statement.

This development arose as rival platform CoinSwitch announced its intention to pursue legal action to recover approximately $9.6 million in digital assets trapped on WazirX’s exchange.

Moratorium

WazirX revealed that Zettai Pte, the Singapore-incorporated company behind its operations, filed for the moratorium on Aug. 27. This filing triggered an automatic 30-day freeze, giving the firm time to draft a restructuring plan.

However, WazirX estimates it will need at least six months to finalize the plan and collaborate with stakeholders.

The company emphasized that the moratorium provides crucial breathing room to address users’ crypto balances and work toward recovering funds.

WazirX explained that under the planned restructuring, the hack’s impact would be distributed among users, who would receive a share of the available token assets proportional to their account balances.

WazirX co-founder and CEO Nischal Shetty noted that the restructuring timeline depends on how quickly the firm and its creditors can agree on a path forward. He added:

“One key factor in our timeline for restructuring is how quickly we can all come together and agree on a path forward. We need to be united in this effort. Your support and collaboration are crucial to making this happen.”

Legal threat

In an Aug. 28 thread on social media platform X, CoinSwitch stated that it had substantial assets — including fiat currency, ERC20 tokens, and other digital assets — stuck on WazirX’s platform following the recent hack.

CoinSwitch explained that it had been unable to recover the funds despite multiple attempts to resolve the issue. The company also expressed frustration over WazirX’s lack of clarity regarding a full recovery plan.

Due to this, the company stated that it has “no choice but to pursue legal action to recover the funds.”

Meanwhile, CoinSwitch assured its users that the affected funds represent less than 1% of its total assets. It is using its treasury reserves to maintain a 1:1 ratio for user holdings.

However, Shetty remains unfazed by the potential lawsuit and said that all users will be treated fairly, regardless of the size of their claims. He added:

“If legal actions are necessary, so be it.”

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Binance CEO Richard Teng revealed that the exchange saw record inflows and one of its highest trading volumes this year as investors panicked in the jittery market on Aug.5

Teng wrote:

“Amid the macroeconomic climate and yesterday’s market downturn, Binance recorded a net inflow of $1.2 billion in the past 24 hours, according to DefiLlama’s CEX Transparency metrics.”

According to DeFillama data, Binance’s inflows had climbed to more than $2 billion as of press time, which is 5x higher than its closest rival, Bybit.

Meanwhile, these numbers are not surprising, considering Binance is the largest crypto exchange by trading volume and controls around 50% of the market, according to Kaiko data. Nevertheless, Teng stated that the substantial inflow to the exchange reflected strong investor confidence in the platform.

On Aug. 5, the global stock and crypto markets faced significant declines as a surge in the Japanese yen led to a rapid unwinding of carry trades. This shift accelerated a sell-off, resulting in substantial losses for investors holding significant digital assets like Bitcoin and Ethereum.

Tax challenge in India

Despite its strong market performance, Binance is navigating significant tax issues in India.

Reports from The Times of India showed that the Directorate General of Goods and Service Tax Intelligence (DGGI) demanded 722 crore Indian rupees ($86 million) from Binance for unpaid Goods and Services Tax (GST).

According to the report, Binance generated 4,000 crore Indian rupees (over $400 million) from Indian clients. These funds were credited to Nest Services Limited, a Binance Group entity based in Seychelles.

Indian tax authorities sent notices to Binance offices in Seychelles, the Cayman Islands, and Switzerland. Initially, these were ignored, but Binance has now appointed a local attorney to address the tax issues.

Meanwhile, this case marks the first time the Indian tax authorities have targeted a crypto firm with such formal notices.

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India-based centralized exchange WazirX seeking partnerships to restore full operations following a significant exploit that resulted in the loss of nearly half its assets.

The exchange’s co-founder, Nischal Shetty, shared the development in a social media post on July 23 and notified users that it is working on a solution to help restart its services. He stated:

“I’ve been reaching out to various potential partners trying to figure a resolution that would help our customers. We’re figuring various directions that can possibly help enable the platform deposits/withdrawals/trading.”

The exploit

WazirX confirmed a security breach in one of its multisig wallets, resulting in the loss of over $230 million in user assets.

On-chain data revealed the theft included more than 200 cryptocurrencies, such as 5.43 billion SHIB tokens, over 15,200 Ethereum tokens, 20.5 million Matic tokens, 640 billion Pepe tokens, 5.79 million USDT, and 135 million Gala tokens.

The stolen funds represent roughly 50% of WazirX’s total $500 million holdings, according to its June proof-of-reserves report. The exchange has temporarily paused trading due to the hack’s impact on its ability to maintain 1:1 collaterals with assets.

Meanwhile, Shetty mentioned ongoing efforts to make customers whole, saying:

“We have few ideas, but we need to hash them out further to look into how feasible they are. I’ve been receiving many calls for help with this issue. We’re actively working with law enforcement to find the culprits and recover the funds.”

He also clarified that the hack did not affect the firm’s fiat INR funds but did not specify whether INR withdrawals would be enabled.

WazirX has launched a $23 million bounty program to incentivize the hackers to return the stolen funds. The firm has received 133 entries so far and is reviewing them.

However, market observers said the possibility of the funds being returned appears slim as the attackers have affiliation with North Korea’s notorious Lazarus Group.

Blame Game

WazirX has continued to maintain that the hack occurred outside its product infrastructure. It stated that the hacked multisig wallet was hosted by third-party custody provider Liminal.

However, Liminal argued that its infrastructure was not compromised and attributed the exploit to compromised devices owned by WazirX.

In response, WazirX has dismissed suggestions about compromised wallet hardware. Shetty explained:

“The WazirX hack was not due to a Phishing link. 3 signatures of WazirX from 3 different devices that each use different hardware wallets were used. All 3 devices were at different locations and the links were bookmarked.

He added:

“Even if we assume that all 3 WazirX devices ended up going to a phished link (which is highly unlikely given their geographic separation and saved links), it would still fail on Liminal’s end since they’re the 4th signer and the signing occurs inside their systems and not on a browser.”

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Binance, the world’s largest crypto exchange by trading volume, faces escalating regulatory challenges in multiple jurisdictions, including India, Canada, and the United States.

India imposes $2.2 Million fine

On June 19, India’s Financial Intelligence Unit (FIU) fined Binance 188.2 million Indian Rupees (approximately $2.2 million) for non-compliance with the country’s Anti-Money Laundering (AML) regulations.

Per the announcement, Binance was charged with operating in India without adhering to the statutory obligations, violating three provisions of the Prevention of Money Laundering Act (PMLA).

So, the regulator stated:

“After considering the written and oral submissions of the Binance, Director, FIU-IND, based on the material available on record, found that the charges against Binance were substantiated.”

Last December, the FIU issued a notice to Binance requesting the exchange justify why enforcement actions should not be taken against it. The fine was imposed after Binance failed to convince the regulator to waive the penalties.

Binance appeals $4.4 million fine in Canada

Binance is reportedly contesting a $4.4 million fine imposed by Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC).

In May, FINTRAC penalized Binance for breaching AML and Counter-Terrorism Financing (CFT) regulations. The regulator cited Binance’s failure to register as a foreign money service business and to report transactions exceeding $10,000.

In its appeal, Binance argued that it does not directly offer services in Canada. Instead, it attributed its presence in the Canadian market to its global operations. Binance also noted that its efforts to establish operations in Canada did not materialize.

Binance.US license suspended in North Dakota

Binance.US, the United States subsidiary of the global exchange behemoth, license as a money transmitter in North Dakota was revoked by the state’s financial regulator on June 17.

The regulator stated that the exchange failed to comply with local regulations and cited Changpeng Zhao‘s federal conviction as a further reason to stop the firm’s regional operations.

Zhao is Binance’s co-founder and the beneficiary owner of the US subsidiary. He is serving a four-month jail sentence in the United States, where he was convicted of breaching local financial regulations.

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India-based web3 gaming community Kratos Gaming Network (KGeN), previously known as IndiGG, has launched an educational campaign on blockchain gaming aimed particularly at students and young Indian gamers.

Spanning over 6 months, the initiative covers the cities of Mumbai, Delhi, Indore, and Kolkata, as well as other tier 1, 2, and 3 cities. KGeN hopes to raise awareness of the key benefits of web3 gaming, showcasing it as a gateway to future career prospects, personal growth, and notably, an alternate way to earn income. To that end, the campaign will feature student meetups where gamers share their stories of how they have been enabled to contribute to their families for income.

Other planned activities include college competitions and roundtable discussions with key figures in the space such as educators and psychologists, who will provide knowledge on the future of gaming and blockchain technology. By encouraging a dialogue among students and parents alike, KGeN also hopes to debunk common misconceptions of gaming and web3 and instead emphasise its positive impact and potential future career path.

Currently, KGeN is developing an ecosystem of global gamer data, which is owned by gamers. Its Proof of Gamer (PoG) engine allows users to build, own, flex and monetize their data. The framework can also be accessed by game publishers looking for gamer cohorts to engage with their games.

Kratos Gaming Network, Elder Member Council, Ishank Gupta commented, “Data ownership for gamers will be a game changer for the industry. With this national campaign we intend to empower gamers and make them aware of the new opportunities and possibilities. Data ownership is going to be revolutionary for the industry, and the potential applications extend far beyond gaming.” 

“We’re talking about a fundamental shift in the way we interact with technology, with users taking ownership of their data and shaping the future of the digital world.”

You can learn more via the Kratos Gaming Network website.