WazirX Rolls Out 55/45 Recovery Plan Post $230M Hack
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Highlights:
- WazirX adopts a 55/45 strategy for user asset recovery post $230 million hack.
- Users can access 55% of assets immediately, with 45% converted to USDT and locked.
- The recovery plan includes user involvement through a poll, ensuring fair asset management.
In a swift response to a recent $230 million hack, Indian cryptocurrency exchange WazirX has rolled out a comprehensive recovery plan. This strategy, designed to mitigate losses equitably among its users, leverages a socialized loss approach. Moreover, it ensures that all affected parties share the burden proportionally.
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
Recovery Strategy and Immediate Access
Following the hack, which impacted 45% of user funds, WazirX announced a 55/45 recovery strategy. This plan allows users to access 55% of their crypto assets immediately, while the remaining 45% will be converted to USDT and locked. This method aims to balance user portfolios and distribute losses evenly.
Drawing lessons from past incidents like the Mt. Gox and Bitfinex hacks, WazirX is adopting best practices to ensure a fair and efficient resolution. The platform aims to minimize disruption and preserve stability through this equitable approach.
However, earlier, Wazirx launched a bounty program to recover over $230 million stolen in the hack. The exchange stated that it is collaborating with over 500 other exchanges and regulatory bodies to block the addresses associated with the stolen funds.
User Options and Poll Participation
WazirX provides users with two different choices for handling their remaining assets. Detailed instructions will be shared with users via email. In addition, this will guide them through the process of selecting their preferred option by August 3, 2024. This approach emphasizes user involvement in the recovery process.
The results of the user poll, though non-binding, will influence the final decision on asset management. The poll results, ongoing investigations, and the platform’s liquidity will guide the ultimate recovery strategy.
To ensure fair distribution, WazirX will create diversified portfolios for the unlocked 55% of users’ assets. This strategy aims to mitigate the impact on users whose portfolios contain affected tokens. If the unlocked portion includes affected tokens, they will be replaced with unaffected crypto assets.
The value of the unlocked portfolio will be determined using the average prices from CoinMarketCap and various global exchanges as of July 21, 2024. This method contrasts with the prolonged uncertainty often experienced in similar scenarios. However, this will aim for a faster and more flexible resolution.
Phased Approach and Future Plans
In an X post, Nischal Shetty, founder of WazirX, stated that socializing the loss across crypto portfolios is the fastest way to reopen the exchange. This partial lock affects only the crypto portfolio balance, not the INR wallet balance. The recovery effort will involve working on the recovery of stolen assets and seeking external help.
Shetty highlighted that similar strategies in past cases have proven effective in facilitating recovery and reopening. Consequently, the platform will be in a better position to resume operations sooner by implementing this socialized loss strategy.
WazirX’s innovative 55/45 recovery strategy showcases its commitment to fairness and transparency in addressing the recent hack. In addition, by allowing users immediate access to a significant portion of their assets and involving them in the recovery process, WazirX aims to restore confidence and stability in its platform.
The fastest way to open the platform again for operations is to socialise the loss across the crypto portfolios.
INR wallet balance will not be impacted.
This partial lock is for crypto portfolio balance only.
This is phase 1 so that part of the crypto portfolio is accessible… https://t.co/CYCbwWCwl0
— Nischal (Shardeum) 🔼 (@NischalShetty) July 27, 2024
