WazirX launches fair fund recovery plan post $230M hack
Drawing lessons from past incidents such as the Mt. Gox and Bitfinex hacks, WazirX aims to apply the best practices from these cases to ensure a fair and efficient resolution.
In a move to address the recent cyberattack that resulted in the theft of approximately $230 million, Indian crypto exchange WazirX has announced a fair and transparent socialized loss strategy for user fund recovery.
The hack, which impacted 45% of user funds, has prompted WazirX to adopt an equitable approach to minimize the disruption to its user base and preserve the platform’s stability.
Approach to loss distribution
In a blog post, WazirX announced that it has opted for a 55/45 approach. This approach allows users immediate access to 55% of their assets while locking the remaining 45% in Tether
USDT
$1.00
-equivalent tokens.
This method contrasts sharply with the prolonged uncertainty often experienced in similar scenarios. By socializing the loss, WazirX aims to distribute the impact evenly across all users, preventing any single group from bearing a disproportionate burden. This approach is expected to facilitate a faster and more flexible resolution than traditional methods.
WazirX is offering its users two distinct options for managing their remaining assets. Each option has specific benefits and conditions and will be shared with users through the WazirX app or website.
According to the exchange, registered users will receive detailed instructions via email, guiding them through the process of selecting their preferred option. The deadline for response is Aug. 3, 2024, at 7:00 am India Standard Time.
Asset management strategy
While the poll is not legally binding, the results, ongoing investigations and the platform’s liquidity will influence the final decision. By participating in the poll, users acknowledge that they have read and unconditionally agree to the terms, remaining bound by WazirX’s Terms of Use.
Related: Liminal blames compromised WazirX devices for hack
To ensure fair distribution, WazirX will create a diversified portfolio with a basket of crypto assets for the unlocked 55% of users’ assets. This strategy is designed to mitigate the impact on users whose portfolios contain affected tokens. If the unlocked portion includes affected tokens, they will be replaced with unaffected crypto assets to maintain balance.
The value of the unlocked portfolio will be calculated based on average prices from CoinMarketCap and select global exchanges as of July 21, 2024, at 8:30 pm IST. WazirX also announced that operations will resume shortly after users have completed the poll to select their preferred asset management option.
The WazirX breach resulted in a significant loss of approximately $235 million, making it the second-largest hack of a centralized exchange in recent times, surpassed only by the DMM exploit on May 31, which saw a loss of $305 million.
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