India’s cryptocurrency exchange which recently got hacked for $230 million (45% of user funds), WazirX announced a recovery and distribution plan. The platform is implementing a socialized loss strategy in order to issue impact equitably among all users.
WazirX has come up with a 55/45 approach which it hopes will offer a faster and more flexible solution for its affected users. The exchange suggested the new strategy will allow the holders to get immediate access to a bigger portion of assets until it makes a full recovery.
WazirX offers users two options in its recovery plan
The hacked Indian crypto exchange is offering two options to users with specific benefits and conditions. WazirX suggests allowing 55% of user crypto assets to be available for trading and/or withdrawals, while the remaining holdings will be converted to their USDT equivalent and locked.
It mentioned that for whatever option a user chooses, a balanced portfolio of unlocked portions (55%) would be created using a section of crypto assets. However, if 55% of the unlocked portfolio holds affected tokens, it will be balanced by replacing the impacted portion with a basket of available unaffected tokens.
The exchange will calculate the value of the unlocked portfolio (55%) on average prices as of 21 July 2024, 8:30 PM IST. The prices will be picked from CoinMarketCap and select global exchanges.
Loss recovery is pivotal to exchange re-opening
In an X post, Nischal Shetty, founder of WazirX, stated that the fastest way to reopen the hacked exchange operations is to socialize the loss across crypto portfolios. He suggested that the process will not impact the INR wallet balance. The partial lock is for the crypto portfolio balance only. This would mark the end of phase 1 and the beginning of phase 2, which would focus on recovery.
Shetty highlighted that WazirX’s recovery effort will involve working on the recovery of stolen assets while finding partners and external help. However, recovery of such a huge amount takes a longer period. He indicated that the platform will be in a better position to open sooner if they socialize the losses similar to how other impacted exchanges have done in the past.
The global crypto market has seen fluctuations over the last week. Bitcoin (BTC) traded around the $66K-$67K area on July 21 and then dipped to the $63K level. BTC has managed to recover and is up by over 2% in the last 7 days. At the press time, Bitcoin is trading at an average price of $68,201.
Ether (ETH) hovered around the $3,500 price level on July 21. It dipped to the $3,100 zone in the past few days. ETH price is down by 6% in the last 7 days. The second largest crypto is trading at an average price of $3,278, at the press time.
