Synopsis
India’s WazirX crypto exchange faced a significant security breach, leading to a $230 million loss. To address this, WazirX will use a ‘socialized loss’ approach, distributing the burden among all users.
WazirX, one of India’s leading cryptocurrency exchanges, recently faced a significant security breach, resulting in a loss of over $230 million. In response, WazirX announced on Saturday a controversial solution: distributing the loss among all customers.
Following the cyberattack, which resulted in the theft of approximately $230 million, equivalent to 45% of user funds, WazirX is implementing a “socialized loss” strategy.
“This approach aims to distribute the financial impact across all users equitably. Unlike traditional recovery methods that can take years, this strategy offers a faster, more flexible solution by allowing immediate access to a significant portion of assets while maintaining the possibility of further recovery for those who choose to wait” WazirX stated in a note.
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What is a socialized loss strategy?
Distribution of funds:
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View Details »55% of user crypto assets will be made available for trading and withdrawals, depending on the selected option. The remaining 45% will be converted to USDT-equivalent tokens and locked.
Balanced portfolio:
For the unlocked 55%, WazirX will create a balanced portfolio using a basket of unaffected crypto assets available on the platform. If the 55% includes affected tokens, they will be replaced with unaffected crypto assets.
Portfolio valuation:
The value of the unlocked portfolio will be calculated based on average prices from and select global exchanges as of July 21, 2024.
“WazirX users must make a choice regarding the management of their remaining assets. Registered users will receive detailed instructions via email, including a link to the WazirX platform where they can select their preferred option. The deadline for response is August 3, 2024,” the crypto firm said.
However, this solution has not been well-received by all. Some customers have expressed their dissatisfaction, arguing that they should not bear the burden of the company’s security failure.
One X user (formerly known as Twitter) tweeted, “The company failed with the security and now wants the customer to pay the price.”
The company failed with the security and now wants the customer to pay the price.
— Rishi Bagree (@rishibagree) July 28, 2024
Another customer wrote, “It was your responsibility to keep our funds safe. Since it’s your mistake, you need to pay back our hard-earned money. Raise funds, sell your properties, give our money back to us.”
It was your responsibility to keep our funds safe since its your mistake u need to pay back our hard earned money. Raise funds, sell your properties give our money back to us.
— Seeking Connection Summer of Shibarium (@MilanAr97154294) July 27, 2024
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