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WazirX

<p class="is-style-lead">Indian crypto exchange WazirX has unveiled a plan to mitigate the effects of a recent hack that resulted in the loss of approximately $235 million.</p> 
<p>The breach, which affected 45% of user funds, has led the exchange to introduce what it’s calling a “socialized loss strategy” to ensure what it calls a more equitable resolution for its users and maintain platform stability.</p> 
<p>WazirX’s July 27 <a href="https://wazirx.com/blog/managing-your-funds-after-the-cyber-attack/" target="_blank" rel="">blog post</a> states that the firm plans to implement a 55/45 approach, where users can access 55% of their assets immediately, while the remaining 45% will be locked in Tether (<a href="https://crypto.news/price/tether/" target="_blank" rel="noreferrer noopener">USDT</a>)-equivalent tokens.</p> 
<p>The exchange says its strategy aims to distribute losses fairly among all users, preventing disproportionate impacts on any single group.</p> 
<p>According to correspondence that WazirX sent to affected users —&nbsp;a copy of which was shared with crypto.news —&nbsp; the exchange presented a poll with two options to recover stolen funds. “Option A” lets users access 55% of their funds “for trading and deposits,” without withdrawal rights, but gives them priority in potential recovery proceeds. “Option B” lets users withdraw 55% of their assets “in a staggered manner,” albeit with lower priority in the recovery queue. In both cases, WazirX states that the remaining 45% of user assets will remain locked on the exchange as “USDT-equivalent tokens,” which would only be returned to users if the firm succeeds in recovering the stolen funds. </p> 
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  Recovery options that WazirX sent to affected users | Source: crypto.news
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<p>In their post, the exchange requested that affected users vote for their preferred option by Aug. 3, 2024. </p> 
<p>According to poll results shared with the crypto.news team, at the time of writing, approximately 62% of the impacted users have selected Option B, which lets them make withdrawals. The other 38% have decided against this, choosing instead to forego immediate withdrawals in favor of securing first priority for any potential recovery proceeds.</p> 
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  Affected users vote on recovery options from WazirX | Source: crypto.news
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<h2 class="wp-block-heading" id="background-on-the-massive-hack">Background on the massive hack </h2> 
<p>The <a href="https://crypto.news/the-wazirx-hack-is-wreaking-havoc-on-crypto-heres-how/" target="_blank" rel="noreferrer noopener">breach at WazirX</a> led to a substantial loss of around<a href="https://crypto.news/wazirx-halts-trading-closes-deposits-following-235m-attack/" target="_blank" rel="noreferrer noopener"> $235 million</a>, ranking it as the second most significant hack of a centralized exchange recently. This incident was only outdone by the DMM exploit on May 31, where the losses amounted to <a href="https://crypto.news/japans-dmmbitcoin-to-match-outflows-after-308m-hack/" target="_blank" rel="noreferrer noopener">$308 million</a>.</p> 
<p>Nischal Shetty, the exchange’s co-founder, took to X today to assure users of the exchange’s potential for recovery and growth following the significant hack.</p> 
<p>Notably, Shetty outlined two historical responses to such crises: lengthy legal proceedings or adopting a socialized loss model coupled with rebuilding efforts. He advocated for the latter, emphasizing quicker recovery through operational growth and profit distribution.</p> 
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   <p lang="en" dir="ltr">Nothing is impossible if WazirX can survive this. It will grow and if it makes profits those can be used for recovery. <br><br>But, it’s only possible if all our customers support us at this time. <br><br>Historically there have been two options that exchanges which faced such situation…</p>— Nischal (Shardeum) 🔼 (@NischalShetty) <a href="https://twitter.com/NischalShetty/status/1817128583409627161?ref_src=twsrc%5Etfw" target="_blank" rel="">July 27, 2024</a>
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<p> You might also like: <a href="https://crypto.news/wazirx-hack-sees-200m-in-crypto-swapped-for-eth-to-thwart-blocking/"> WazirX hack sees $200m in crypto swapped for ETH to thwart blocking </a> </p> 
<p>Shetty also stressed the importance of community support, adding, “Only together, we can do this,” as he rallied for a unified approach to overcoming the platform’s challenges.</p> 
<h2 class="wp-block-heading" id="community-criticism">Community criticism </h2> 
<p>Meanwhile, there has been significant discontent among crypto users regarding WazirX and its co-founder, particularly concerning the socialized loss strategy. Many have <a href="https://x.com/tes23ract/status/1817129186428858451" target="_blank" rel="">labeled the approach a scam </a>and have questioned why the burden of the exchange’s challenges should fall on the users.</p> 
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   <p lang="en" dir="ltr">This is an outright scam by WazirX. Stupidity to ask users share the loss when the platform security was sub-par. Just pay it from the funding and from the fat pay checks that you pay to your core team (obv no mention of this anywhere). <a href="https://twitter.com/hashtag/WazirX?src=hash&amp;ref_src=twsrc%5Etfw" target="_blank" rel="">#WazirX</a> <a href="https://twitter.com/hashtag/scam?src=hash&amp;ref_src=twsrc%5Etfw" target="_blank" rel="">#scam</a> <a href="https://twitter.com/NischalShetty?ref_src=twsrc%5Etfw" target="_blank" rel="">@NischalShetty</a> <a href="https://twitter.com/WazirXCares?ref_src=twsrc%5Etfw" target="_blank" rel="">@WazirXCares</a> <a href="https://t.co/hmbWKTRjiN" target="_blank" rel="">https://t.co/hmbWKTRjiN</a></p>— Value Trader🔥 (@_ValueTrader) <a href="https://twitter.com/_ValueTrader/status/1817025155555852540?ref_src=twsrc%5Etfw" target="_blank" rel="">July 27, 2024</a>
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<p>Additionally, some affected <a href="https://x.com/NurulChouhury/status/1817129015913660851" target="_blank" rel="">users have voiced </a>their preference not to have the 45% of their affected assets that will remain locked converted to a stablecoin like USDT, but rather to keep them in the original cryptocurrencies.</p> 
<p>In response, Shetty acknowledged these concerns, arguing that maintaining a stable value in USDT is crucial for planning recovery strategies effectively.</p> 
<p>Shetty noted that the cost of cryptocurrencies fluctuates constantly, with lower values in bear markets and higher in bull markets, making it challenging to determine a consistent recovery amount with volatile assets.</p> 
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   <p lang="en" dir="ltr">I hear you but this is not feasible or sustainable as cost fluctuates every minute. <br><br>In a bear market the price will be low and in bull price will be high. <br><br>In order to be able to device plans for recovery, a stable value helps as that’s the final amount that need to be solved… <a href="https://t.co/PqsElUjOBB" target="_blank" rel="">https://t.co/PqsElUjOBB</a></p>— Nischal (Shardeum) 🔼 (@NischalShetty) <a href="https://twitter.com/NischalShetty/status/1817129875611730291?ref_src=twsrc%5Etfw" target="_blank" rel="">July 27, 2024</a>
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<p>In 2023, crypto industry participants <a href="https://crypto.news/biggest-crypto-hacks/" target="_blank" rel="noreferrer noopener">lost</a> over $1 billion in various hacks. </p> 
<p> Read more: <a href="https://crypto.news/wazirx-co-founder-announces-bounty-program-to-recover/"> WazirX co-founder preps bounty program to recover stolen funds </a> </p>

WazirX implements ‘socialized loss strategy’ following $235m hack

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