WazirX’s $230M hack led to a 55/45 socialized loss strategy, granting users immediate access to 55% of their assets, with 45% locked in USDT.
Users must choose their asset management option by August 3, 2024, with instructions provided via email and the WazirX app.
The $235M WazirX breach is the second-largest centralized exchange hack, surpassed only by the $305M DMM exploit on May 31.
In response to the recent cyberattack resulting in the theft of approximately $230 million, Indian cryptocurrency exchange WazirX has unveiled a fair and transparent socialized loss strategy. This plan aims to recover user funds effectively and restore stability to the platform.
Equitable Distribution Strategy
The hack affected 45% of user funds, prompting WazirX to adopt a 55/45 approach to fund recovery. This method allows users immediate access to 55% of their assets, while the remaining 45% is locked in Tether (USDT) equivalent tokens. This strategy contrasts with the uncertainty typically experienced in similar situations, ensuring a more predictable resolution.
By socializing the loss, WazirX distributes the impact evenly across all users, preventing any single group from bearing an excessive burden. This approach is expected to facilitate a quicker and more flexible recovery compared to traditional methods.
In response to the recent cyber attack that led to the theft of $230 million (45% of user funds), we are committed to handling the situation fairly and transparently. We are implementing a socialized loss strategy to distribute the impact equitably among all users.To manage the… pic.twitter.com/uOKvxWuEip
— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) July 27, 2024
User Options and Instructions
WazirX is offering users two distinct options for managing their remaining assets, each with specific benefits and conditions. Detailed instructions will be shared with users via email and through the WazirX app or website. Users have until August 3, 2024, at 7:00 am IST to respond.
Although the poll is not legally binding, its results, along with ongoing investigations and the platform’s liquidity, will influence the final decision. By participating in the poll, users acknowledge they have read and agreed to the terms outlined by WazirX.
To ensure fair distribution, WazirX will create a diversified portfolio for the unlocked 55% of users’ assets. This portfolio will include a mix of unaffected crypto assets to maintain balance. If the unlocked portion contains affected tokens, they will be replaced to preserve the portfolio’s value.
Calculating Asset Value and Resuming Operations
The value of the unlocked portfolio will be calculated based on average prices from CoinMarketCap and select global exchanges as of July 21, 2024, at 8:30 pm IST. WazirX has announced that operations will resume shortly after users complete the poll to select their preferred asset management option.
The WazirX breach, which resulted in a significant loss of approximately $235 million, stands as the second-largest hack of a centralized exchange in recent times. It is surpassed only by the DMM exploit on May 31, which saw a loss of $305 million.
WazirX’s socialized loss strategy demonstrates its commitment to minimizing disruption and ensuring a balanced recovery for all users. By offering immediate access to a portion of funds and implementing a diversified portfolio approach, the exchange aims to stabilize its platform and regain user trust.
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