WazirX, the Indian cryptocurrency exchange, recently suffered a cyberattack that resulted in a loss of $230 million. The platform’s users, both those affected by the attack and those who were not, will be impacted by the exchange’s controversial recovery plan. The platform did not insure clients’ funds, which has raised concerns among users and the wider crypto community.
In a blog post published by WazirX, the exchange announced its proposal for the “socialisation” of losses, which involves distributing the impact among all users on the platform. This approach has been deemed fair and transparent by the exchange, as it aims to offer a faster and more flexible solution compared to what users have experienced in similar situations in the past.
The lack of insurance for customer deposits has been a point of contention for many users, as reputable crypto exchanges typically insure deposits to protect against cyberattacks. WazirX’s founder, Nischal Shetty, confirmed that the platform did not have viable insurance options for customer funds, leading to the decision not to insure them.
Under the proposed recovery plan, 55 percent of all users’ assets on the platform will be available for trading and withdrawals, while 45 percent will be locked. The plan aims to ensure that users, both impacted and non-impacted by the cyberattack, are treated equitably in the distribution of losses.
The recovery plan will only apply to users’ crypto asset holdings on the platform, not their Indian rupee balances. The exchange will continue its recovery efforts, including tracing and recovering stolen assets, collaborating with partners, and exploring compensation methods such as potential airdrops. The unlocking of locked tokens will be contingent upon the progress of these recovery efforts.
