The legal team for WazirX said today that the exchange’s customers doubt whether the exchange should be made whole in crypto terms.
Another Jolt For The Affected WazirX Users
Leading Indian cryptocurrency exchange WazirX suffered a massive security breach on July 18, 2024, resulting in hackers stealing $230 million of customers’ digital assets. In the latest development, the exchange’s legal advisers have opined that users are unlikely to recover their funds in full despite the ongoing restructuring process.
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Speaking on a conference call with journalists, George Gwee, a director at restructuring firm Kroll, that is helping WazirX with its restructuring, stated that at least 43% of the funds any user had in WazirX are unlikely to be recovered. Gwee added that the recovery might be “anywhere between 55% and 57% of the funds in an optimistic scenario.”
For those unfamiliar, a restructuring typically follows a severe incident at an organization to reorganize its operations, finances, and governance.
In WazirX’s case, the restructuring aims to distribute the remaining digital assets pro-rata to the affected users. Without delving too much into detail, the exchange hinted at discussions to share profits from its revenue-generating products and services.
Jason Kardachi, managing director at Kroll, noted:
In crypto terms, it’s extremely unlikely that we can make people whole. So, whatever profits we generate or contributions from white knights or third parties can help improve the recovery in crypto terms. But I don’t think it’s realistic to think that we could ever make people whole when half or thereabouts of the crypto has suffered from the cyber attack.
However, Kardashi offered a glimmer of hope, saying that if the overall crypto market improves, users may recover more of their lost investment in dollar terms.
WazirX’s hack is, by far, the largest cryptocurrency exchange hack in India. Since the hack, the company has undertaken various measures, some unsuccessfully, to compensate users who lost their funds stored on the exchange.
One such measure was the proposal to socialize the loss or the “55/45 approach”, which suggested that all users, regardless of whether they were affected by the hack, could only trade 55% of their tokens. In contrast, the remaining 45% would be converted into stablecoins and locked in the…
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