WazirX Heist Sparks Concerns Over Customer Fund Recovery
By: Eva Baxter
The prominent Indian crypto exchange, WazirX, endured a significant security breach on July 18, 2024, where hackers stole over $230 million worth of digital assets. Efforts are currently underway in Singapore to restructure the company and recover the funds.
Legal advisers to WazirX have expressed doubts over the complete recovery of stolen funds for the exchange’s users. Despite the ongoing restructuring process, it is unlikely that users will get their full funds back. George Gwee, a director at Kroll, the restructuring firm aiding WazirX, disclosed that at least 43% of the user's funds might not be recovered. In an optimistic situation, users might only recover between 55% and 57% of their digital assets.
Rest assured, the restructuring aims to redistribute the remaining assets proportionately among the affected users. WazirX is also contemplating sharing profits from its revenue-generating services to enhance recovery efforts. However, as highlighted by Kroll's Managing Director, Jason Kardachi, making users whole in crypto terms is highly implausible. The recovery process might see a slight improvement if the overall cryptocurrency market sees a resurgence.
WazirX had earlier proposed a controversial measure to manage the loss via a '55/45 approach,' which suggested converting 45% of users' tokens into stablecoins and locking them in the exchange. This proposition faced intense backlash within the Indian crypto community, leading WazirX to drop the plan.
The WRX token has seen a significant decline since the hack, hitting lows of $0.12 compared to its March 2024 peak of $0.37. Despite these setbacks, India’s crypto ecosystem remains robust, with high user engagement keeping the market potential vibrant.
Nevertheless, numerous challenges hinder India's ascent as a global crypto superpower. The country's stringent tax regulations dissuade retail investors and traders. Simultaneously, the Reserve Bank of India (RBI) encourages banks to adopt emerging technologies like blockchain and AI for future-proofing their operations.
