The controversy around Indian Crypto exchange WazirX Hack refuses to die down. WazirX suffered a major cyber attack loosing $230 M. After playing the blame game with Luminal Custody, its wallet handling services, the company finally came up with a recovery plan. The exchange conducted a survey to decide how to distribute losses among users, which has been widely criticized as unfair and potentially illegal.
WazirX, CEO suggested a “55/45 loss-sharing plan” for the recent WazirX Hack with its users. In this recovery plan WazirX would give 55% access to its users and would lock convert 45% of their assets after converting them into USDT (stablecoin). This share would be used to recover the stolen funds of the crypto exchange.
This WazirX Hack recovery plan faced a severe backslash from its users terming it illegal and unethical. The plan according to WazirX users doesn’t address the loss of trust and funds. It also unnecessarily burdens users and doesn’t provide adequate compensation for the losses incurred. The plan would also be a punishment for those users whose wallets were safe from the hack.
The Indian crypto exchange in an effort to sooth its users from the WazirX Hack presented them with two recovery options, the path of legal proceedings, and the second “55/45 loss-sharing plan”. The first option is a lengthy legal process that would delay the recovery of stolen funds. The second option would distribute the losses but would work on an immediate recovery plan through finding new sources of revenue.
The crypto exchange also mentioned finding more new ways to raise funds, primarily through airdrops and launching new tokens.
WazirX assured the users that the final decision about WazirX Hack rested with them. They would select one of the two options by voting between the two by Aug 3rd, 2024.
WazirX Founder Admits Poll Sham
WazirX is facing severe criticism from users for proposing risk sharing to recover funds from the recent $230M major WazirX Hack cyber attack. The company had conducted a poll suggesting recovering the stolen money from its current users through loss sharing, a move which has been strongly criticized.
The founder of WazirX later admitted that there was a mistake in the poll and a detailed feedback form would be released soon. The company is now running a bounty program and with the help of legal experts in finding ways to recover the money from the WazirX Hack and compensate the affected users.
WazirX Flawed Poll Strategy
A controversial poll on July 27th asked users to choose how to handle their remaining funds which many found unfair and possibly illegal. CEO Nischal Shetty clarified that the poll was not legally binding and aimed to gather opinions with a more detailed feedback form to follow.
The crypto community, including leaders from other exchanges, criticized WazirX’s approach, arguing it unfairly punished those not directly affected by the hack. There are unconfirmed reports that WazirX sought help from Binance to compensate affected users.
This incident raises doubts about WazirX’s ability to manage security issues and maintain user trust, with the impact on its reputation and user confidence still uncertain.
Indian Government’s Silence on WazirX Crisis
WazirX(India’s largest cryptocurrency exchange) suffered a major setback about 10 days ago when hackers stole $230 million (approximately Rs 2000 crore) from one of its multi-sig wallets.
After this incident, clueless WazirX users were not able to withdraw their money.
On July 27, the exchange announced that losses would be divided equally among all users until the stolen funds were recovered.
Indian government meanwhile has not made any statement or taken action on this incident yet. Indian taxpayers had severely criticized the government for deducting 10%, and 30% TDS on making crypto withdrawals on loss and profits respectively despite being a silent partner and doing absolutely nothing for Indian populace.
Drawing lessons from past incidents such as the Mt. Gox and Bitfinex hacks, the Indian Crypto exchange aims to apply the best practices from these two similar cases to ensure a fair and efficient resolution.
Also Read: WazirX and Liminal Custody Clash Over $230M Cyber Attack
