Indian cryptocurrency exchange WazirX has announced a plan to spread the $230 million loss from a recent security breach among all its customers. This has caused a lot of concern in the local crypto community. Many users have also taken to social media to complain about the methodology of blocking funds.
WazirX stopped all trading activities last week after a cyber attack. This attack stole nearly half of its reserves, making it the biggest crypto theft in India. Over 200 different cryptocurrencies were taken, including popular ones like Shiba Inu (SHIB), Ethereum, Polygon’s MATIC, and Pepe.
How WazirX plans to handle the loss WazirX has a plan called the "socialized loss strategy." Here’s what it means:
-They will give customers back only 55 per cent of their crypto holdings. -The remaining 45 per cent will be locked in USDT-equivalent tokens, a type of stable cryptocurrency. -This plan affects all customers, even those whose tokens were not stolen. So, if you had 100% of your tokens safe, you will still only get 55% back for now.
On the other hand, what will happen if 100 per cent of the tokens in the user's portfolio are stolen tokens? If the entire portfolio (100 per cent) consists of stolen tokens, WazirX will create a 'balanced portfolio' for the unlocked portion (55 per cent) using a basket of crypto assets. This basket will be derived from the available assets on the platform.
Customer Options WazirX is giving customers two options:
Option A: You can trade and hold your crypto assets with priority for recovery efforts but can’t withdraw them.Option B: You can trade and withdraw your assets but will be at a lower priority for recovery. You can switch to Option A anytime before making trades or withdrawals. WazirX founder Nishal Shetty, in a recent tweet, said, "We’re listening to all the feedback from everyone. While the poll is ongoing, we’ll work on figuring some more options. Ultimately, we want to ensure we are able to find a path in the best interest of everyone. Only with your support we can move ahead."
Many customers are asking why WazirX isn’t using its own profits to help cover the losses.
WazirX plans to restart operations within a week with this new strategy. The crypto community is watching closely to see how this will affect the platform and its users.