Tech Desk 
Jul 30, 2024
Indian cryptocurrency exchange WazirX made a startling revelation on Saturday, declaring that it will ‘socialise’ its $230 million security breach among its customers, sending shockwaves through the local community. The Mumbai-based firm was the victim of the country’s largest cryptocurrency heist last week, which affected nearly half of its local reserves, compelling a complete halt to trading activity on its platforms.
The company has now proposed an arrangement to help resume operations in a week or so by implementing a 'fair and transparent socialised loss strategy' to distribute the impact “equitably” among its user base.
The company will ‘rebalance’ customer portfolios, returning 58% of their holdings while locking the rest in USDT-equivalent tokens. For those who managed to escape without a scar, the company stated, “users with 100% of their tokens in the ‘not stolen’ category will receive 55% of those tokens back.”
The security breach resulted in the theft of over 200 different cryptocurrencies, with the bulk of the losses concentrated in several popular tokens including Shiba Inu (SHIB), Ethereum, Polygon’s MATIC, and the meme cryptocurrency Pepe, according to blockchain data analysis provided by third-party explorer Lookchain.
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The breach took advantage of a discrepancy between multi-signature wallet provider Liminal’s interface and the contents of the transactions.
Moving ahead, WazirX is offering consumers two options: allowing customers to trade and hold their assets, prioritising recovery efforts and restricting withdrawals. Conversely, users could trade and withdraw but under a lower recovery priority.
“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 added.
“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,” said Nikhil Pahwa, a leading policy voice and editor of MediaNama.
What some perceive to be a thorn in the bush is the company’s lack of decision-making regarding using its profits to create balance among customers.**
