Crypto exchange WazirX’s plan to handle the $230-million hack is facing backlash from customers and crypto influencers. The exchange recently asked users to vote on the next steps. In a blog post on Saturday, WazirX revealed that 45% of its assets were lost in the hack. For now, the exchange has decided that customers can access and trade about 55% of their tokens, even if some of their assets were stolen, as trading has resumed briefly on the platform.
The exchange has offered customers two choices to vote on until August 3. Many users consider the 55/45 strategy “unfair” because 45% of their remaining tokens will be converted to stablecoins (USDT) and locked, based on their current token mix. This could reduce the overall value of their crypto portfolios. Indian crypto exchanges like WazirX and CoinDCX don’t let customers withdraw their funds in crypto to hold in hardware wallets. The only option is to sell their assets and convert them into INR, leading to a loss of their crypto holdings.
Deepak Shenoy, CEO of Capital Mind, criticized WazirX on X, stating: “This should mark the end of WazirX. The company is trying to shift the cost of the theft onto its users. Legally, they should first cover their own losses before distributing the rest. Essentially, they should go through NCLT liquidation.”
Kashi Raza, founder of the crypto education startup Bitinning, also weighed in: “The 55/45 plan by WazirX should not be accepted. Why are people even voting on options A or B? There are many other solutions to consider. I urge Nischal and WazirX not to rush and cause further harm to users.”
Responding to a post on X detailing the recovery plan by WazirX founder Nischal Shetty, a customer Dr Priyank S said: “This has to be a joke. The lapses were on your side, yet you’re asking users to bear the burden? Do you realise the impact this will have on most of the users, especially considering that their investments are now down by 50 percent? This isn’t just about numbers; it’s about trust and responsibility. How can you expect customers to support a platform that doesn’t own up to its mistakes?”
Another user Zakir Hussain on X said: “WazirX is trying to act smart and play the victim card here. I wish I was wrong, but I just want to tell the WazirX users that your money is stolen, and the chance of you getting it back is very slim. Only way forward will be WazirX sharing the profits.”
WazirX’s Recovery Options: Prolonged Legal Battle or Swift Rebuilding?
Shetty proposed two options for handling the $230 million loss from the cyberattack on July 18, when a multisig wallet was compromised:
- Legal Proceedings: This option involves lengthy legal battles, which can take years and incur high legal fees. The outcome would be distributing whatever assets remain, but no one would receive anything until the process concludes, and the results might resemble the socialized loss approach.
- Socialize Loss and Rebuild: This approach involves immediately socializing the loss among users and then focusing on rebuilding the business. By growing the company and finding new buyers or initiatives, the exchange can distribute any future profits and accelerate recovery.
Immediate Relief: 55% of Assets Available for Trading
In its blog post, WazirX explained: “We are adopting a fair and transparent socialized loss strategy to evenly distribute the impact across all users. Historically, similar situations have led to years of uncertainty and limited fund access. Our 55/45 approach provides a quicker, more adaptable solution. It allows immediate access to a significant portion of your assets while offering the potential for further recovery for those who choose to wait.”
WazirX detailed that 55 percent of user crypto assets will be available for trading or withdrawals, based on the chosen option, while the remaining 45 percent will be converted to USDT-equivalent tokens and locked. The exchange is also considering other options, such as airdrops, new tokens, and innovative ideas, to generate profits and aid in recovery.
