WazirX, the leading cryptocurrency exchange in India, has unveiled its strategy to address the $230 million loss incurred following a major hack on its platform. The WazirX plans, after weeks of deploying a bounty program to recover the stolen funds, has finally announced its approach to compensate affected users equitably.
Socialized Loss Strategy
WazirX plans to implement a socialized loss strategy to distribute the impact equitably among all users. This approach, announced on their X page, reflects their commitment to handling the situation fairly and transparently.
“In response to the recent cyber-attack that led to the theft of $230 million (45% of user funds), we are committed to handling the situation fairly and transparently. We are implementing a socialized loss strategy to distribute the impact equitably among all users. To manage the remaining assets, we offer two options, each with specific benefits and conditions. Users can find details in the WazirX app or on our website,” WazirX tweeted.
WazirX plans for Distribution
In a detailed blog post, WazirX explained the percentage for the distribution of funds. The exchange clarified that:
- 55% of user crypto assets will be made available for trading and/or withdrawals (depending upon the option selected)
- The remaining 45% will be converted to USDT-equivalent tokens and locked
Founder’s Insights
WazirX founder Nishal Shetty elaborated on the planned approach to handle the $230 million loss. He explained that the 55/45 approach offers a faster and more flexible solution. This method balances quick access for some with potential priority recovery for others. It aims to resolve the situation more efficiently than traditional proceedings.
Criticism and Concerns of WazirX plans
However, the WazirX plans have been criticized by policy analyst Nikhil Pahwa, who argued that the approach was improper and bordering on the abuse of access and trust ceded to WazirX by its users. “As an exchange or custodian, they have no right to do this. Imagine the NSE doing this to stock market investors. Users can no longer trust WazirX, and should withdraw whatever they have left there as soon as they can,” Nikhil tweeted.
Increased Bounty
In response to the criticism, WazirX has increased its bounty for white hat hackers who can help in retrieving the funds to $23 million, or 10% of the stolen funds. The security breach occurred on the exchange’s Multi Sig wallet, which the WazirX team has described as a force majeure event.
Despite the challenges, WazirX plans to handle the crisis with transparency and fairness. This effort aims to restore trust and stability within its user community.
