WazirX’s $23 Million Reward Plan Brings Little Relief to Users Amid Concerns
The chaos in India’s crypto ecosystem following one of WazirX’s wallet breaches is far from over. Over the weekend, the Indian crypto exchange launched a $23 million bounty program in the hope of recovering stolen funds worth over $230 million (roughly Rs. 1,924 crore) from third parties or the hacker behind the breach. The exchange is offering rewards of up to $10,000 (roughly Rs. 8.3 lakh) in USDT to those who can lead to the identification and freezing of the stolen funds. The exchange has also decided to offer $23 million (roughly Rs. 192 crore) — 10 percent of the stolen amount as White Hat Bounty to the hacker in exchange for the remaining funds.
Speaking to Gadgets360, WazirX user Sana Afreen said that while this reward offers hope for relief for the community, the scope of actually being able to trace the funds needs to be expedited. Afreen is the Director of Partnerships at Rizzle, an AI-powered video creation platform.
“I have invested around Rs. 25 lakhs in crypto through WazirX. Now that the crypto market is on a bull run, my investment is more than the original investment amount. Since withdrawals are still paused at WazirX, my profits are locked in. Hence, the speed of tracking needs to be faster. As a user, it is very worrying that WazirX is not sure when to restart withdrawals,” Afreen said.
She also notes that the WazirX community could get more clarity on the calculation of their investment situation if the exchange could provide some timelines around the restart of withdrawals.
According to WazirX’s official blogThis reward program is valid for three months.
“All submissions must include detailed information including addresses, transactions, and methodologies used for tracking and recovery. Participants must provide a proof of concept demonstrating how the funds can be tracked. WazirX will verify the information before distributing the reward,” the blog said, noting that all submissions will be reviewed within 72 hours of receipt.
Commenting on the situation, Jagdish Pandya, the founder and CEO of blockchain-centric investment firm Block On, stressed that these are the kinds of situations where India needs a special government committee to oversee damage control. Citing previous hacks on centralized exchanges such as Mt. Gox, Coincheck and FTX, Padya said that user communities of hacked platforms have a history of having to accept losses or enter an indefinite waiting period in the hope of getting refunds.
The lack of regulatory authority in India that can help WazirX recover the stolen funds is not good, the venture capitalist believes.
“Despite repeated reminders from the Indian Web3 circle, the government has not set up any body to monitor the losses in such situations and be responsible for protecting consumers’ money and safeguarding their assets,” Pandya said.
Crypto analysts suspect that the North Korean Lazarus Group is behind this sophisticated hacking attack.
So far, no one from the Indian government has issued a statement on the massive WazirX breach. However, it is notable that India’s Finance Minister Nirmala Sitharaman is scheduled to present India’s Union Budget for FY 2024-2025 this week. Against the backdrop of the WazirX hack, expectations of tax relief from the cryptocurrency have taken a hit.
A WazirX hot wallet that was managed by Liminal was hacked by the hacker last week on July 18, 2024. This wallet was multi-signature – requiring two transaction authorizations from WazirX and one from Liminal. After the hacker unethically gained access to the required signatures from WazirX, he was able to trick Liminal into giving his authorization as well.
Following this incident, members of the Indian crypto community have been asked to split their holdings into smaller units stored in multiple wallets to avoid such an unfortunate outcome.
According to Nischal Shetty, co-founder of WazirX, team is working on ideas that can add value to its ecosystem to “help fill the void left by the stolen assets.”
Meanwhile, Srijan R Shetty, co-founder of crypto firm Fuze, has reminded WazirX to make a decision and release a statement on whether they plan to drop the legal action against the hacker, which “stops even a white hat hacker from returning funds.”
