Indian cryptocurrency exchange WazirX plans to undo all trades that occurred following its withdrawal freeze on July 18, which was caused by a $235-million hack.
“All users will have their portfolio balances on the WazirX platform restored to what they were on 18 July 2024, 1 p.m. IST,” the exchange stated, adding that the process would be conducted “over the next few days.”
WazirX stated that all users’ portfolio balances would be restored to their state as of July 18, 2024. The decision to reverse account balances and undo certain trades aims to ensure an equitable outcome for users following the abnormalities from the July hack.
WazirX will cancel trades between July 18 and July 21 to guarantee fair treatment for all users. Any fees and referrals arising from these trades will also be reversed.
WazirX co-founder Nischal Shetty proposed two paths forward for the exchange following the breach. accessing 55% of their funds without the ability to withdraw but with priority for any potential recovery funds, or accessing 55% of their funds with the ability to withdraw but with secondary priority. The remaining 45% would be converted to USDT and locked.
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The proposal met with backlash, prompting both WazirX and Shetty to clarify in subsequent posts that the poll was not legally binding and was intended to gauge user opinions on the best way forward.
Shetty reiterated that the poll was not binding but defended the option of socializing the losses. He argued that this approach would allow the exchange to re-open and continue operations while exploring other options for recovering the lost tokens and reimbursing affected users.
However, many criticized this approach, arguing that it unfairly penalizes users for the breach. CoinDCX co-founder Sumit Gupta stated that the company should first absorb the losses before passing them on to customers. “Making customers directly absorb the 45% losses is utter nonsense. The poll options are also framed in a manner to protect the business first and not the customers,” Gupta added.
The breach targeted WazirX’s multisig wallet on the Ethereum network. Over 200 different crypto assets were stolen, including Shiba Inu, Ethereum, Polygon, and PePe memecoin. In response, WazirX has paused all withdrawals, acknowledging the security breach and describing it as a “force majeure event” beyond its control.
The hack resulted from discrepancies between data displayed on the digital custody platform Liminal and the actual transaction contents on WazirX. The attacker reportedly stole at least $100 million in Shiba Inu and $52 million in Ether, accounting for 45% of WazirX’s reserves.
