Delhi High Court Mandates Transparency from Zettai Pte Ltd
The Delhi High Court has mandated that Zettai Pte Ltd, the owner of the cryptocurrency exchange WazirX based in Singapore, must submit their acquisition contract with Binance and share specifics about their restructuring strategy. This ruling arises as creditors seek clarity following a significant $235 million cyber breach that occurred last year. Justice Sachin Datta issued the directive, requiring the company to file the necessary documentation, including proceedings from the Singapore High Court regarding the restructuring, within a week.
Concerns Over Ownership and Recovery Initiatives
The court’s intervention appears timely, as WazirX had just wrapped up a revote on a revised restructuring scheme after the Singapore High Court overturned an earlier decision to reject it. This scrutiny reflects increasing concerns about the convoluted ownership of WazirX, especially regarding recovery initiatives after the cyberattack in July 2024, which resulted in substantial financial losses for users.
The ownership dispute has intensified, with Binance outright denying that the acquisition of WazirX was ever concluded. In September 2024, Binance labeled WazirX’s attempts to shift culpability as merely an evasive tactic, asserting it never had any operational control over the exchange, despite initial contractual agreements.
Legal Appeals and Regulatory Oversight
In October 2024, creditors Sudhir Verma and Kunal Dhariwal formally appealed to the court, questioning the exchange’s response to the hack and subsequent developments. Earlier this year, in January, the Delhi High Court sent notices to over ten parties—including regulatory bodies and central government ministries—requesting information on their regulatory oversight of cryptocurrency exchanges and their specific actions concerning WazirX.
“The court’s order to produce the Binance-Zettai agreement reflects a judicial acknowledgment of users’ rights to transparency and asset ownership in the digital realm,” noted Dhariwal in a statement. He expressed optimism that the involvement of the Reserve Bank of India (RBI) could lead to substantial regulatory progress to protect the sector.
Call for Investigation and Future Proceedings
The petition, supported by advocates Navodaya Singh Rajpurohit, Rithik Dhariwal, and Dhawesh Pahuja, also calls for a Special Investigation Team to investigate the cyberattack, proposing a body that comprises experts from various regulatory and law enforcement agencies. Rajpurohit emphasized the need for this team’s collaboration with international counterparts to effectively address financial fraud and cybercrime.
Lead petitioner Verma asserted that any wrongdoing exposed during the investigation would be dealt with decisively. This ongoing restructuring effort has been fraught with challenges, with the Singapore High Court initially rejecting Zettai’s proposal on June 4, only to later reverse that decision and mandate a revote in July. Notably, only a mere 3.3% of creditors participated in the initial vote.
The recent voting period, which extended from July 30 to August 6, is expected to be independently assessed by the consulting firm Alvarez & Marsal. A follow-up court hearing is scheduled for August 26, during which officials from the RBI are expected to be present. Inquiries for comments have been directed to WazirX.
