WazirX launches 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 strategy for user fund recovery. 

The hack, which affected 45% of user funds, has led WazirX to implement measures aimed at minimizing disruption to its users and maintaining 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)-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 users two different options for managing their remaining assets. Each option has its own set of conditions, which will be communicated to 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 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 manage the unlocked 55% of users’ assets, WazirX will form a portfolio containing various crypto assets. This approach aims to lessen the impact on users with affected tokens. If any affected tokens are included in the unlocked portion, they will be swapped with unaffected crypto assets to keep the portfolio balanced.

The value of the unlocked portfolio will be calculated based on average prices from CoinMarketCap and select global exchanges as of July 21 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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