On Monday, September 16, WazirX, a popular Indian crypto exchange, organized the second townhall meeting to address creditor queries after the $230 million hack in July. George Gwee, Director at Kroll Restructuring Administration LLC, explained how the affected users can get up to 100% USD claims. He also explained the entire restructuring plan proposed in the moratorium filed in Singapore court.
WazirX Restructuring Plan Ensures Up To 100% USD Claims
In a recent presentation, creditors of the Indian crypto exchange could potentially recover up to 100% of their USD claims. However, it is contingent on a rise in crypt prices. An analysis conducted by Kroll illustrates various recovery scenarios depending on the price movements of Bitcoin (BTC) and Ethereum (ETH).
We’re live 🎬
Join in 👉 https://t.co/KAVOT8dZ5L https://t.co/ZHMLMbBcvP
— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) September 16, 2024
One case shows BTC rising from $60,000 to $100,000, a 66% increase, leading to a 92% USD recovery for creditors. Whilst, a 50% rise in ETH from $2,420 to $3,630 translates into an 83% USD recovery. These price upticks bring substantial benefits, especially for BTC holders, with up to 59% token recovery in BTC. Similarly, ETH holders could see a 71% token recovery.
A key part of this rebalancing process involves WazirX creditors choosing to receive distributions in either BTC or ETH. Initially, the value held in BTC accounted for only 20% of assets, while ETH comprised 80%. However, after rebalancing, the value held in BTC and ETH aligns with creditors’ choices, now holding 69% in BTC and 31% in ETH. This rebalancing ensures that the asset distribution matches the denomination choices of the creditors.
Advertisement
Ultimately, regardless of the token denominations selected by creditors, they are guaranteed a 55% USD recovery at the point of rebalancing. Yet, the potential for a 100% recovery remains viable if the crypto market continues to appreciate in the coming months. This offers hope for creditors looking to recoup their losses albeit a few concerns, including taxation laws in India.
Tax Concerns
India levies a 1% Tax Deducted at Source (TDS) on the sale of crypto worth INR 50,000 within a financial year. It also levies a 30% flat capital gains tax on a minimum gain of INR 1,00,000 in a fiscal year. Hence, the token conversion idea by WazirX could involve tax implications.
The token conversion could be deemed as a “sale” in the eyes of the law. However, since the exchange doesn’t have sufficient reserves for Shiba Inu (SHIB), Pepe Coin (PEPE), Polygon (POL), and other ERC-20 tokens, users who hold these tokens would have to resort to a conversion.
When a user asked the WazirX team about the same during the townhall meet, founder Nischal Shetty responded swiftly. He noted that they have yet not thought about the tax implications in detail. Nonetheless, he promised to help the users in any way possible.
Shetty advised the users to resort to their tax consultants. Also, he spotlighted the option for holding the portfolio as it is without any conversion. However, in this case, users may have a restriction in withdrawal due to the lack of reserves for ERC-20 tokens that were stolen in the hack. In addition, rejection of WazirX’s moratorium in Singapore could further complicate the process.
Advertisement
Also Read: North Korean Crypto Devs Behind DeltaPrime Attack & $5.93 M Theft
