Indian crypto exchange WazirX has established an entity called Zensui Corporation in Panama, nearly a year after a cyber attack resulted in the loss of almost $235 million from one of its wallets. This move allows WazirX to continue its crypto operations without requiring a Singapore license.

The action comes after Singapore has tightened regulations concerning crypto transactions.  Starting June 30, the city state will begin implementing the Financial Services and Markets (FSM) Act, 2022.

Due to this stricter regulatory framework for digital token services, it will be significantly more difficult for companies to run crypto businesses without a special license from the Monetary Authority of Singapore (MAS).

The court was also informed by WazirX that the company is transferring the platform’s crypto-related services to a subsidiary that has been established outside of Singapore.

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In a filing to the Singapore Supreme Court, the company stated, “Zettai (Zettai Pte Ltd is the Singapore entity of the crypto exchange) has taken steps to establish a subsidiary, Zensui Corporation in Panama, and is preparing to transfer the platform’s cryptocurrency-related services to Zensui if regulatory changes require it.”

Panama is recognized for its relatively laid-back approach to crypto regulations.  Zensui (which can be read as WazirX) is expected to operate more smoothly in that context, with regulatory compliance being easier, and to deliver seamless service to its users.

WazirX indicated in its submission to the Singapore Supreme Court that Zettai does not intend to register with the Financial Intelligence Unit of India (FIU-IND) for WazirX operations.

According to the statement, Zanmai India, the Indian arm of WazirX, is registered with the FIU-IND and oversees all compliance responsibilities.  It stated that after the hack in July 2024, FIU-IND had not issued any notices, penalties, or warnings to Zettai or Zanmai India for failing to register.

The company stated that the FIU-IND has not raised any objections or issues regarding the matter to date, and Zettai has not received any communication from the FIU-IND about the need for registration.

Last July, WazirX experienced a significant hack in which approximately $235 million—about 45% of its total reserves—was drained from the system.  It was claimed that the assault was connected to the North Korean Lazarus Group, infamous for its prominent crypto thefts.

After the breach, WazirX suspended trading and withdrawals, causing panic among users, attracting regulatory scrutiny, and impacting nearly 4.4 million Indian users.

The company suggested a restructuring plan under court supervision to repay investors, which has received approval from more than 75% of creditors. Repayments will, however, be determined by the current values of cryptocurrencies rather than those at the time of the hack. WazirX has recovered $3 million of stolen assets as part of its ongoing recovery efforts.

Security breaches like the WazirX hack, along with problems like those related to BitBNS Exchange and the Morris Coin scam from 2021, are hindering the wider acceptance of cryptocurrency in India.

The government has also instituted a 1% TDS on cryptocurrency transactions and a 30% tax on profits from digital assets – the highest globally. Additionally, it has categorized crypto earnings alongside those from gambling and lotteries.

The difficulties, however, could not halt the advance of crypto adoption in India, which emerged as one of the leading countries in the crypto landscape by 2024.

The Centre’s postponement of the implementation of regulations for digital assets and cryptocurrencies has come under scrutiny from the Supreme Court, which has pointed to possible economic dangers.  According to recent reports, the government is getting ready to publish a comprehensive discussion paper on crypto policy options later this month.