Indian cryptocurrency exchange WazirX has announced a controversial plan to "socialise" its last week's loss of $230 million, which shocked the crypto community and all its users.
WazirX has suspended all trading activities on its platform after an attack compromised nearly half of its reserves in India’s largest crypto heist.
It has formed a strategy to resume its operation within a week or so by distributing the impact “equitably” among its customers, according to a post by WazirX on X.
The firm plans to rebalance customers' portfolios on its platform, returning only 55 per cent of their holdings while locking the remaining 45 per cent in USDT-equivalent tokens. The move will also affect the customers whose tokens were not directly affected by the breach, as the firm said that "users with 100 per cent of their tokens in the ‘not stolen’ category will receive 55 per cent of those tokens back."
The breach resulted in the theft of over 200 different cryptocurrencies, with huge losses concentrated in several popular tokens such as Shiba Inu (SHIB), Ethereum, Polygon’s MATIC, and the meme cryptocurrency Pepe, according to blockchain data analysis by Lookchain.
The cyber-attack exploited a discrepancy between the data displayed on multi-signature wallet provider Liminal’s interface and the actual contents of transactions, WazirX had earlier said.
The firm is giving two options to its customers. The first allows customers to trade and hold their crypto assets with priority for recovery efforts but restricts withdrawals, and the other permits trading and withdrawals but places users at a lower priority for recovery. Users can switch between these options, albeit with certain conditions.
"Option B lets you trade and withdraw your assets, but recovery efforts will focus on those who chose Option A first. You can switch to Option A anytime before you make any trades or withdrawals,” WazirX said.
Nikhil Pahwa, a leading policy voice and editor of MediaNama, said the company has exceeded its role as a mere exchange, which is not good.
"WazirX is actually exercising control over crypto assets that it holds for users. This means that it is not just acting as an interchange & a depositary, but actually reaching into user wallets and taking out crypto and giving it to others. It can’t claim to be an exchange only," he wrote on X.
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