Victims File Class-Action Lawsuit Against WazirX Over $235M Hack

Victims File Class-Action Lawsuit Against WazirX Over $235M Hack

A group of 30 victims is pursuing a class-action lawsuit against Indian crypto exchange WazirX following a massive $235 million hack that took place on July 18. The lawsuit, led by Supreme Court lawyer Aman Rehaan Khan, claims WazirX acted outside its legal boundaries, particularly in how it handled user funds after the hack.

Background of the $235 Million Hack

The hack impacted roughly 4 million WazirX users, draining nearly 45% of user funds from the platform’s hot wallet. To mitigate the situation, WazirX pursued a Scheme of Arrangement in Singapore, securing a four-month moratorium to temporarily shield itself from legal claims.

Legal Claims and Allegations

The lawsuit, set to be filed by mid-November with India’s National Consumer Disputes Redressal Commission, argues that Zettai Pte Ltd, WazirX’s Singapore-based parent company, is not legally bound to the user agreement established through its Indian entity, Zanmai Labs Pvt. Ltd. According to Khan, WazirX's decision to file for restructuring under Zettai lacked legal justification, adding complexity to the case.

Further allegations include:

  • Lack of Communication on Cash Freezes: Victims claim they were not informed about frozen cash balances, which Khan argues violates the users’ rights.
  • Security Lapses and Ownership Disputes: WazirX faced scrutiny over security measures following accusations by CoinSwitch co-founder Ashish Singhal and legal complaints by Jaivir Bains, highlighting ongoing security concerns.

Growing Legal Challenges for WazirX

In addition to the class-action lawsuit, two other cases against WazirX have been filed in the Delhi High Court. The Financial Intelligence Unit of India is also investigating the exchange for potential violations related to money laundering and security practices. WazirX, responding to these issues, announced on Oct. 25 its intention to find a new custodian partner to provide insurance for user funds.

WazirX’s Next Steps

As WazirX navigates increasing legal pressures, the company is focused on restructuring its operations and addressing security gaps. Meanwhile, a separate group of 11 users intends to pursue legal action after the moratorium expires, potentially compounding WazirX’s legal troubles.