Crypto Recovery Token Signals WazirX Comeback

What to Know:

• WazirX has issued Recovery Tokens (RTs) to users affected by a past security incident, representing a portion of their locked funds.
• This move is part of a court-approved restructuring plan following a significant hack in 2024 that severely impacted the exchange’s reserves.
• The issuance of RTs allows users to potentially recover up to 75-80% of their funds over time, depending on the exchange’s future profitability and asset recovery efforts. This may impact liquidity as users await potential buybacks or future tradability of the tokens.

WazirX, India’s largest cryptocurrency exchange, has made a significant step in its recovery process following a major security breach in 2024. The exchange has officially confirmed the distribution of Recovery Tokens to eligible users as part of its court-sanctioned restructuring plan. This initiative aims to enable users to reclaim a substantial portion of their assets that were locked due to the incident, contingent on the exchange’s future financial performance.

Recovery Tokens Distributed to Users

WazirX announced on X that Recovery Tokens (RTs) have been credited to users within the 60-business-day timeframe stipulated by the restructuring scheme. Users can view their allocations in the Funds tab of the WazirX application. The tokens were allocated pro rata, based on the size of each user’s approved claim, ensuring equitable distribution. This development marks a key milestone since the platform’s relaunch in late October of the previous year.

Details of the Recovery Plan

Upon the resumption of trading, eligible users initially received a First Distribution, which constituted approximately 85% of their approved claims, calculated using reference prices set under the scheme. The newly issued RTs represent the remaining portion of user claims and provide holders with the right to future buybacks by the company, subject to sufficient value recovery. The exchange has clarified that RTs are currently non-tradable. The restructuring plan involves reviewing recoveries every three months. If at least $10 million in unencumbered value is recovered within a cycle, a portion of these funds will be used to repurchase RTs, leading to further distributions to users. Smaller recoveries will be accumulated until the specified threshold is met.

Background: The 2024 Security Incident and Legal Proceedings

The recovery initiative follows a July 2024 security exploit, where over $230 million was illicitly siphoned from a WazirX multisignature wallet. Subsequent blockchain analysis revealed the movement and sale of significant amounts of Shiba Inu (SHIB), Ethereum (ETH), and other tokens, resulting in a near 45% depletion of the exchange’s reserves. This incident forced the platform to suspend operations for over a year and initiated legal battles regarding the allocation of losses.

Court Rulings and Restructuring

In October 2025, the Madras High Court ruled against WazirX’s original plan to distribute losses across all users. The court’s decision affirmed that customer assets, including cryptocurrencies like XRP, remain the property of individual users and cannot be used to offset unrelated platform losses. This ruling, along with approvals from the Singapore High Court and support from over 95% of voting creditors, steered WazirX towards a more structured, claim-based recovery model.

Future Prospects and Market Implications

The current structure, utilizing Recovery Tokens, allows users to maintain a stake in the exchange’s future progress without requiring immediate decisions. WazirX has indicated that the tokens may become tradable in the future, pending legal clearance, which would provide users with the option to exit their positions early or hold onto them in anticipation of potential gains. The success of WazirX’s recovery plan could set a precedent for other exchanges facing similar challenges, potentially influencing market structure and user confidence in the broader cryptocurrency ecosystem.

Related: XRP Activity Plummets: Should You Worry?

Source: Original article