Crypto Heist: WazirX Makes U-Turn On Socialised Loss Strategy

SUMMARY

WazirX has now “decided to go slow” on its socialised loss strategy after “blowback” from customers

WazirX has been facing flak from the crypto community over its handling of the recent $230 Mn hack

The exchange’s 55-45 approach, in which WazirX proposed to allow access to and trade 55% of users’ crypto portfolio, was deemed “unfair” by several users

Following the massive backlash over its plans to make customers absorb 45% of the losses caused by the $230 Mn crypto hack, WazirX has reportedly abandoned the plan now.

While WazirX cofounder Niscal Shetty earlier proposed to ‘socialise’ the loss and sought feedback from the community on the way forward to restart operations, the crypto exchange has now “decided to go slow” on its 55-45 approach after “blowback” from customers, Moneycontrol reported, citing sources.

WazirX began a poll on July 27 to chart the path forward after the hack. The poll concluded on August 3.

Earlier, it was reported that WazirX sought help from Binance to bail out customers affected by the hack, purportedly carried out by North Korean cyber criminals.

Last month, WazirX halted operations and withdrawals on the platform after hackers stole $230 Mn worth of crypto assets, representing 45% of total user funds on the exchange, from one of its multisig wallets.

Following this, the company also announced a prize of $23 Mn as a part of its bounty programme to recover the stolen assets.

In a blog post on July 27, WazirX came up with a 55-45 approach, allowing users to trade and access 55% of their portfolio tokens, regardless of whether or not their crypto assets had been compromised in the hack.

The crypto exchange also said that in the event that 55% of a user’s unlocked portfolio included affected tokens, it would replace it with a mix of other unaffected crypto assets.

While WazirX said the move was aimed at socialising the loss, the proposal came under fire from the crypto community, with CoinDCX cofounder Sumit Gupta calling it “utter nonsense”.

The proposal didn’t sit well with customers either, with many saying WazirX’s 55-45 approach was “unfair” as 45% of their tokens would be converted into USDT-equivalent tokens and locked, which could bring down the value of their overall portfolio.