WazirX Plans to Reopen Exchange in February 2025 after $235M Exploit

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As a seasoned crypto investor with a knack for navigating through the tumultuous seas of digital assets, I find myself both intrigued and cautiously optimistic about WazirX’s recovery efforts. Having been through my fair share of market volatility and exchange hiccups, I appreciate the transparency shown by Nischal Shetty in addressing the recent $235 million security breach.

As a researcher, I’m sharing an update about WazirX, a prominent cryptocurrency exchange in India. After experiencing a substantial security breach that led to a loss of approximately $235 million, the platform has decided to resume operations. The co-founder, Nischal Shetty, disclosed this plan during a recent town hall meeting, which was streamed on YouTube.

Shetty announced that WazirX intends to bring back its trading operations by February 2025, having developed a comprehensive restoration plan. The exchange is planning to introduce fresh features and services to bolster income and ensure swift payout to affected users once the platform resumes functioning next year.

Recovery Efforts and New Features

The proposed restructuring involves the introduction of “asset recovery tokens”. These tokens would be distributed to creditors as a form of compensation, enabling them to recover approximately 48% of their previously lost funds. As stated in the YouTube video, these newly created digital assets will be allocated proportionately according to each user’s existing holdings. After launch, these tokens can be traded on the platform itself.

Furthermore, WazirX intends to launch additional features like crypto staking, an OTC (Over-the-Counter) trading desk, and futures trading options for its users. The company announced that some of the earnings from fees charged on these new services will be used to purchase recovery tokens. This action is designed to boost WazirX’s recovery fund and eventually repay users.

In response to users expressing a preference for more self-control over their assets, WazirX announced they are beginning to create a Decentralized Exchange (DEX) as an addition to their current system. The company revealed that this new DEX will include a management token by default, enabling users to engage in the platform’s community by trading and collecting incentives.

The revenue generated from the DEX will also contribute to victim payouts, with users being given the option to convert their recovery tokens into DEX tokens.

WazirX Looks to White Knights to Raise Funds

WazirX’s rehabilitation strategy goes beyond just platform enhancements. They are proactively seeking partnerships with possible “savior” investors to obtain emergency funding for the distribution of funds. Furthermore, they are taking legal steps to retrieve the stolen resources.

The organization declared on X that they are dedicated to recovering funds that are tied up or stolen, with the aim of helping their creditors. So far, users have been able to take out 55% of their cryptocurrency assets and 66% of their traditional currency deposits. However, the rest of these funds remain unreachable at this time.

In July 2024, cybercriminals attacked the company, stealing approximately $235 million from customer accounts on their platform. This incident revealed weaknesses in WazirX’s security measures, leading to a temporary halt of operations and initiating a restructuring phase. Since its parent company, Zettai, is based in Singapore, this process is being carried out there.

As an analyst, I find myself in the position where I’ve learned that back in September, a federal court in Singapore afforded us a timeframe of four months to carefully craft and implement a robust restructuring strategy.

Although suffering a setback of $235 million due to the hack, WazirX continues to grapple with additional regulatory hurdles from Indian authorities. The incident has prompted financial authorities in India to probe deeper into the exchange’s operations, with the Financial Intelligence Unit (FIU) taking a closer look to ascertain the root cause of the cyberattack.

Furthermore, a group of impacted users have initiated a collective lawsuit against the company at the National Consumer Disputes Redressal Commission. Simultaneously, the platform is dealing with two distinct legal matters under review by the Delhi High Court.

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2024-11-07 19:52