WazirX hack: Crypto exchange drops plan to socialise losses after backlash

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Hacked crypto exchange WazirX is back to ground zero after plans to socialise its losses faced massive pushback from customers during its week-long poll that concluded on August 3rd, sources told Moneycontrol.

The poll was set up on July 27 to decide on a way forward to restart operations, as the exchange paused had withdrawals and trading following a $230-million security breach in one of its multisig wallets. The exchange lost 45 percent of its crypto assets in the theft.

The plan to socialise losses, or the 55/45 approach, allows customers to access and trade only 55 percent of their assets on the exchange, while the remaining 45 percent will be converted to stablecoins (USDT) and locked by the exchange, irrespective of whether the customer’s assets have been stolen.

“The plan wasn’t final. So, to restart operations, the exchange had to chart a forward path and reached out for the community’s feedback. After the blowback, WazirX decided to go slow on it,” the source told Moneycontrol.

In an interview last week, WazirX Founder and CEO Nischal Shetty had shared that he is in talks with most major global exchanges for support, and to even look for a potential buyer.

Shetty said that the exchange had already submitted its records to CERT-In, and is in constant touch with the FIU (Finance Intelligence Unit) and other government agencies. WazirX is also conducting a detailed forensic test on its network of devices involved in the malicious transactions.

WazirX had reached out to former partner Binance too, Moneycontrol had exclusively reported. Industry sources had said that several aspects of WazirX’s business, including a significant chunk of its revenue and $80-million worth of WRX tokens, are controlled by Binance. Both the exchanges are currently in the middle of a legal battle.

Also read: Sent records to CERT-In, in touch with FIU, regulators: WazirX’s Nischal Shetty