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Indian crypto exchange WazirX is implementing a socialized loss distribution strategy following its $230 million hack.
Last week, WazirX suffered a breach that allowed hackers to extract users' funds. According to the team, the digital wallet used by the WazirX team had six signatories—five from WazirX and one from Liminal, with transactions requiring three WazirX signatories (using Ledger hardware wallets) and one Liminal signatory for approval.
"During a cyber attack, there was a discrepancy between the information shown on Liminal's interface and the actual signed transaction, leading to suspicions that the transaction payload was altered to transfer wallet control to an attacker," the team said.
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Addressing the hack, which impacted 45% of user funds, WazirX is opting for a 55/45 approach for distribution.
Users will have access to 55% of their assets while the remaining 45% will be locked in Tether.
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.
— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) July 27, 2024
To manage the… pic.twitter.com/uOKvxWuEip
Socializing the loss allows WazirX to distribute the impact to all of its users rather than a smaller pool disproportionately being affected.
Registered users will receive instructions on how to access their assets via email. Two options will be offered with specific benefits and conditions. Users are requested to choose one option before 03 August 2024, 07:00 AM IST.
"The recent cyberattack has posed significant challenges and setbacks on us and our users alike, and we are deeply committed to addressing these issues with transparency and fairness. Your input and support as a community are crucial as we navigate through this period and work towards restoring full functionality," WazirX said.
WazirX said the firm has "taken guidance" from other crypto exchanges including "Mt. Gox and Bitfinex, which faced similar challenges."
Last week, Mt. Gox began sending repayments to its creditors, almost one decade after its website was hacked.
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"As of 2024, [Mt. Gox] creditors have started receiving partial repayments, with the total expected to be around 20% of the original holdings. This case demonstrates the complexities and potential lengthy timelines involved in resolving large-scale crypto losses," WazirX said about Mt. Gox.
WazirX highlighted how Bitfinex redeemed all BFX tokens within eight months, which allowed it to "continue operations while providing users with options and eventually making them whole."
