WazirX’s recovery plan sparks user outrage and legal action threats
Indian crypto exchange WazirX is facing backlash over its recently announced strategy to socialize the $230-million hack loss. The exchange revealed it lost 45% of its assets in the breach and proposed a 55/45 approach for the remaining tokens. Customers are voting on two offer solutions until August 3.
According to reports, WazirX is seeking assistance from its former partner, Binance, to help bail out affected customers. It added that the sources have revealed that as of the July 18 hack, Binance held $80 million worth of WRX tokens.
Users call the recovery plan unfair
Many customers criticized WazirX’s 55/45 strategy as “unfair” over social media, with 45% of their remaining tokens set to be converted to stablecoins (USDT) and locked. This will potentially reduce users’ overall crypto portfolio value. Indian crypto exchanges don’t allow customers to withdraw crypto to hardware wallets. The only withdrawal option will be to liquidate assets into INR.
The hack temporarily halted withdrawals and trading activities on the exchange. The report added that a legal dispute is still ongoing. Some components of WazirX’s business, including revenue, are still under Binance’s control.
A blog post from the exchange on May 2023 mentioned that the “WRX token is controlled by Binance. The IEO (initial exchange offering) for WRX was conducted by Binance, and all the sale proceeds of WRX IEO (i.e. 108,401 BNB tokens worth $2 million) were collected and retained by Binance.”
Nischal Shetty, the founder of WazirX, addressed the queries around the poll. He mentioned that the poll is a preliminary step to understand opinions and it is not legally binding upon the users or the platform. He added that the hacked crypto exchange will soon launch a feedback form to collect more ideas. Shetty stated that this is a major cyber attack and more time is needed to find a solution.
Ten days after the hack, WazirX is exploring ways to tackle theft and restart the platform.
Community criticism and legal action follows WazirX’s plan
Sumit Gupta, CEO of CoinDCX, criticized WazirX’s move to ensure user recovery. He stated that the way the hacked exchange is handling this entire situation is not community-first. He mentioned that this might not go down well.
Hate to be saying this, but the way @WazirXIndia is handling this entire situation isn’t community first and this IMO won’t go down well for them. This sadly is also hurting the other ecosystem participants.
The first contribution to losses should ALWAYS come from the Company…
— Sumit Gupta (CoinDCX) (@smtgpt) July 29, 2024
A wave of discontent has surged among WazirX users. Customers are calling for a Central Bureau of Investigation (CBI) inquiry into the incident. They suspect a potential insider sabotage and demand accountability from WazirX and its co-founder.
The users have approached the DCP South Zone of the Delhi Police. The note shows dissatisfaction among users with WazirX’s response to the hack. They are arguing that the platform’s recent announcement, proposing that customers bear 40% of the losses before any recovery or compensation process begins.
