WazirX Shares More Details on How to Recover User Balances After Hack: Details

WazirX, the Indian crypto exchange that recently suffered a major hack that resulted in the loss of almost half of its reserves, has asked its users to wait for a few more days to restore their balances. In its latest update, the Mumbai-based exchange has given more details about its recovery plan. WazirX will restore users’ wallets based on their status on July 18, effectively canceling all transactions made between July 18 and July 21. Meanwhile, the stolen amount of over $230 million (approximately Rs. 1,900 crore) remains untraceable.

The exchange informs its user community about the current situation said“We are forced to restore all account balances and reverse all transactions made on the WazirX platform following the suspension of withdrawals on July 18, 2024 at 1:00 PM IST.”

This essentially means that when WazirX implements its controversial “socialized loss strategy,” users’ wallet balances on the platform will be restored to their July 18, 2024 levels. WazirX claims to have a user base of 16 million.

The exchange said that trades between July 18 and 21 will be cancelled to ensure fairness in portfolio recovery.

“Any transactions executed after July 18, 2024, 1 PM IST will be rendered ineffective and all associated fees and referrals will be rolled back in the same manner. Any fiat or crypto successfully deposited after July 18, 2024, 1 PM IST has been noted and will be addressed in a future update shortly. This decision was not taken lightly and is intended to facilitate a fair outcome for users,” the exchange said.

The WazirX user community has been active in 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 receive 55 percent of those tokens back, while the remaining 45 percent will be converted into USDT-equivalent tokens and frozen.

Many people from the Indian crypto space, including Arjun Vijay of Giottus and Sumit Gupta of CoinDCX, have asked WazirX to reconsider the plan. Users will now have to voluntarily freeze their funds, or they will lose their place on the priority list when the stolen funds have to be recovered.

WazirX’s multi-sig wallet, which was hacked on July 18, was overseen by Liminal Custody. In recent days, both companies have denied that they were the point of breach in the hack.

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

Speaking to Gadgets360, Vyas’ lawyer Varun Rawal said that this petition has been filed in the public interest and WazirX and Liminal should be held responsible for wiping out a significant amount of around Rs 1,900 crore from the Indian economy.

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

At this time, withdrawals and deposits on WazirX are still suspended, as is the trading service.

© Thomson Reuters 2024