Tech
WazirX Crypto Exchange Hack: How Much Assets Were Lost, CEO Nischal Shetty’s Announcement, and What Happens Next
Indian cryptocurrency exchange WazirX said that about 45% (according to preliminary data) of its cryptocurrencies were hit by a cyberattack on July 18, resulting in the loss of over $230 million from one of its wallets.
Before the attack, the cryptocurrency exchange, which calls itself India’s largest by volume, had said it held about $500 million in digital assets.
“As of June 10, 2024, at 6:30 PM, WazirX’s total assets stood at an impressive ₹4,203.88 Crore (USDT 503.64 Million), marking an astonishing 79% increase from the data shared in January 2023,” WazirX said in an earlier statement, adding, “For two consecutive years, WazirX has proudly maintained its position as the largest exchange by reserves, underlining its status as a reliable and solvent platform for cryptocurrency enthusiasts.”
However, after the hack, we were unable to view the exchange’s reserve test page.
Screenshot of the “under maintenance” screen displayed while searching for WazirX’s proof of reserve | Photo credit: Coin Gabbar
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What happens next?
In addition to notifying Indian law enforcement and establishing several reward programs to track down stolen assets, WazirX conducted a survey to decide how to allow users to access their funds. Ultimately, the exchange settled on a “socialized loss strategy.”
“A socialized loss strategy is a method where losses resulting from a situation, such as a cyber attack, are shared among all crypto wallet users in a fair and equitable manner,” WazirX explained in a blog post, saying that users who were not affected by the theft at all will only receive 55% of their tokens back, while the deducted assets will be used to rebalance the wallets of users who saw more than 45% of the tokens in their wallets lost due to the theft.
Users were given two options: Option A would allow users to trade on the platform without withdrawing their crypto assets and would be given higher priority for recovery efforts, while Option B would allow users to withdraw their assets but with lower priority for recovery efforts.
A screenshot of the message showing the two options users can choose from | Photo Credit: WazirX
Many WazirX users on X responded with shock and anger at the prospect of losing their tokens and called for WazirX to compensate users from its own profits. Others were upset that the asset valuation would be taken from data from July 21, rather than July 18, when the hack occurred. Several other WazirX users called for the exchange to publish an updated breakdown of its holdings and user assets following the hack.
WazirX CEO Nischal Shetty said his team was working to find other options and asked for user support to move forward. He refuted a user X who had compared the situation to the collapse of Sam Bankman-Fried’s FTX crypto exchange; Shetty said the WazirX hack was not the same as FTX’s misuse of funds.
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