The waiting time for WazirX creditors will depend on the approval or rejection of its restructuring plan. Meanwhile, FTX creditors are set to receive their long awaited repayments starting Feb. 18. “Convenience class” creditors will get full reimbursements plus interest. Additionally, LayerZero Labs also recently announced that it decided to settle its legal dispute with the FTX estate over a contested equity stake and financial transactions involving Alameda Ventures. The firm ultimately settled after recognizing that the battle was not against FTX itself but rather its creditors.
WazirX Warns Creditors of Prolonged Repayment Timeline
Indian crypto exchange WazirX issued a warning that repayments related to its $234 million hack could be delayed quite a bit, potentially extending as far as 2030. The company shared a statement on X that outlines two possible outcomes depending on the approval or rejection of its restructuring scheme, and urged creditors to carefully consider their options.
The hack took place in July, during which cybercriminals exploited a vulnerability in WazirX’s multisig wallet system. By taking advantage of a flaw that required three out of six signatures to authorize transactions, the attackers managed to steal a very large amount of crypto assets.
The breach was a major blow to India’s crypto industry, which is already facing regulatory scrutiny. Indian exchanges have been under a lot of pressure due to declining trading volumes, largely attributed to the country’s 1% TDS on each transaction. Many retail customers turned to foreign exchanges to avoid these taxes, which added even more strain on domestic platforms.
WazirX proposed a restructuring plan that could accelerate repayment timelines, offering creditors a structured approach to fund recovery. This plan includes profit-sharing mechanisms that could potentially increase the final payout. However, if the proposal is rejected, creditors could be left in limbo for years due to ongoing legal disputes over the company’s ownership. Without an approved restructuring scheme, the next steps in the repayment process will remain uncertain and prolong the ordeal for the affected users.
In the worst-case scenario, if WazirX enters liquidation, creditors might receive reduced repayments. Liquidation costs and the lack of additional recovery mechanisms will diminish the overall amount available for distribution. A prolonged liquidation process could also result in creditors missing out on potential future market gains, as the value of their assets may decrease over time.
FTX Creditors Set to Receive Funds Starting Feb. 18
While WazirX users have a long road ahead of them, things are finally looking up for FTX creditors. FTX Digital Markets, the Bahamian subsidiary of the collapsed crypto exchange FTX, is set to start repaying creditors who lost access to their funds after the platform’s dramatic downfall in November of 2022.
According to a statement from FTX creditor Sunil Kavuri on Feb. 4, repayments will start on Feb. 18 for “convenience class” creditors, who are those with claims under $50,000. These creditors are expected to receive 100% of their adjudicated claim value, along with 9% annual interest dating back to November 2022.
The repayment process is being facilitated by BitGo, though it is still uncertain whether Kraken, another firm helping with the distribution, will follow the same schedule. If all eligible claimants file complete claims, FTX Digital Markets could be expected to pay out more than $16 billion.
After extensive legal battles and negotiations, FTX’s debtors confirmed that the company’s reorganization plan took effect on Jan. 3. The first group of creditors scheduled for reimbursement is expected to receive their payments by early March.
FTX’s collapse in November of 2022 was one of the most shocking events in all of cryptocurrency history. FTX was once one of the most dominant exchanges, but it crumbled within just a week due to a liquidity crisis that forced it to declare bankruptcy. Its former CEO, Sam Bankman-Fried, resigned in disgrace and was later convicted on multiple fraud charges. He was sentenced to 25 years in prison for his role in the collapse, which left thousands of users unable to access their funds.
Many FTX victims, including Kavuri, endured serious financial and emotional strain over the past two years. Reports indicate that Kavuri alone lost more than $2 million when the exchange folded.
The criminal proceedings related to FTX were concluded by the end of 2024, and four other former FTX and Alameda Research executives are also facing legal consequences. Former Alameda CEO Caroline Ellison and former FTX Digital Markets co-CEO Ryan Salame received yearslong sentences, while ex-FTX engineering director Nishad Singh and co-founder Gary Wang were sentenced to time served.
Overall, creditors are finally seeing some progress in their fight to recover their lost funds. While the resolution will bring relief to some, the aftermath of FTX’s collapse still serves as a cautionary tale in the crypto community.
LayerZero Settles Legal Battle With FTX Estate
LayerZero Labs, the crosschain protocol firm that was co-founded by Bryan Pellegrino, also recently reached a settlement with the FTX estate after two years of litigation over transactions involving Alameda Ventures, the venture capital arm of Alameda Research. The dispute centered on funds that LayerZero withdrew before FTX’s collapse in November of 2022 and an equity stake held by Alameda Ventures in LayerZero. FTX wanted more than $21 million from the firm as part of its legal claims.
Pellegrino announced the resolution in a Jan. 31 post on X, and pointed out that LayerZero incurred millions in legal fees during the process. He explained that the firm ultimately decided to settle after recognizing that the battle was not against FTX itself but rather its creditors, a group that includes LayerZero. As part of the agreement, the company returned the original repurchase amount to the estate.
In 2022, Alameda Ventures agreed to acquire a roughly 5% stake in LayerZero, transferring $70 million to the firm and purchasing $25 million worth of STG tokens. However, FTX’s bankruptcy in November 2022 left many companies in limbo, with deals in progress and funds in motion.
LayerZero tried to repurchase its equity stake by forgiving a $45-million loan to FTX, but the exchange’s estate later alleged that the firm took advantage of FTX’s financial distress. In September of 2023, the estate filed a lawsuit claiming that LayerZero negotiated a ”fire-sale transaction” with then-Alameda CEO Caroline Ellison during the company’s liquidity crisis.
Court documents revealed that LayerZero also planned to repurchase the STG tokens from Alameda for $10 million, which was a price much lower than the original $25 million valuation. However, the transaction was never completed because Alameda never transferred the tokens, and no funds were sent from LayerZero. The settlement of this legal battle is the latest resolution in the unwinding of FTX’s very complicated financial entanglements.
This article was originally Posted on Coinpaper.com
