WazirX Shares More Details on Restoring User Balances After Hack: Details

WazirX, the Indian crypto exchange that recently faced a significant hack, resulting in the loss of nearly half of its reserves, has requested its users to allow a few more days for balance restoration. In its latest update, the Mumbai-based exchange provided further details on its recovery plan. WazirX will restore user portfolios based on their status as of July 18, effectively nullifying all trades made between July 18 and July 21. Meanwhile, the stolen sum of over $230 million (approximately Rs. 1,900 crore) remains untraced.

Updating its user community on the current situation, the exchange said, “we are constrained to restore the balances of all accounts and undo all trades carried out on the WazirX platform following the stoppage of withdrawals on 18 July 2024, 1 PM IST.”

This essentially means that when WazirX deploys its controversial ‘socialised loss strategy’ — users will have their portfolio balances on the platform restored to what they were on July 18 2024. WazirX claims to have a userbase of 16 million.

The exchange stated that trades between July 18 and 21 are being nullified to ensure fairness in the portfolio restoration process.

“Any trades carried out following 18 July 2024, 1 PM IST will be made ineffective and any associated fees and referrals will similarly be reversed. Any fiat or crypto successfully deposited following 18 July 2024, 1 PM IST has been taken note of and will be addressed shortly in a future update. This decision has not been made lightly and aims to facilitate an equitable outcome for users,” the exchange noted.

The WazirX user community has been actively responding to the exchange’s ‘socialized loss strategy.’ Last week, WazirX explained that users with 100 percent of their tokens in the ‘not stolen’ category will have 55 percent of those tokens returned, while the remaining 45 percent will be converted to USDT-equivalent tokens and locked.

Many from India’s crypto circle including Arjun Vijay from Giottus and Sumit Gupta from CoinDCX asked WazirX to revise the plan, which asks users to either voluntarily lock their funds or lose their spot on the priority list if any recovery of the stolen funds was to be made.

The multi-sig wallet of WazirX, which was hacked on July 18, was under the oversight of Liminal Custody. In recent days, both companies have denied being the point of breach in the hack.

In the backdrop of all this, a law student named Gauransh Vyas from Indore has filed a petition against WazirX and Liminal with the National Company Law Tribunal (NCLT).

In conversation with Gadgets360, Vyas’ lawyer Varun Rawal said this petition has been filed in public interest and that WazirX and Liminal must be held accountable for wiping off a hefty amount of roughly Rs. 1,900 crore from India’s economy.

Others are also taking steps to initiate a legal action against the crypto exchange.

For now, withdrawals and deposits on WazirX remain suspended along with the trading service.

© Thomson Reuters 2024