As a seasoned analyst with over two decades of experience in the financial industry, I find the situation at WazirX quite troubling. The proposed “55/45” plan to socialize losses from a cyberattack is a risky move that could potentially erode user trust and confidence in the platform.
As a crypto investor, I’ve been following the backlash against WazirX over their proposed “55/45” plan. This plan seems to suggest that they want to distribute the losses incurred due to the recent attack on their platform equally between the company and its users – 55% to the company and 45% to users. While I understand the need for a crisis management strategy, this approach has raised serious concerns among the user community about fairness and transparency.
On July 27th, WazirX initiated a survey to gauge public opinion about a proposal to reactivate the platform following a hack that resulted in a significant loss of approximately $230 million in cryptocurrency. The idea was to share these losses evenly amongst all users.
Following customer backlash, it seems the crypto trading platform has decided to scrap their initial plan instead.
Based on information from the exchange’s blog, the suggestion was that users could only use up to 55% of their holdings within the platform. The remaining 45% would then be converted into reserves held in stablecoins.
WazirX co-founder: ‘This is a major cyber attack’
In response to criticism from users, WazirX co-founder Nischal Shetty quickly explained that the poll wasn’t legally obligating. He stated that it was intended to gather community opinions, but this explanation doesn’t appear to have lessened the anger of the exchange’s user group.
As someone who has been in the industry for quite some time, I understand that gathering opinions from users is crucial to making informed decisions and creating a platform that truly caters to their needs. That’s why we are conducting this poll as an initial step in our process.
— Nischal (Shardeum) 🔼 (@NischalShetty) July 29, 2024
“I’m dealing with a significant cyber incident, and I need some extra time to handle the resolution. Your valuable input and patience during this process will be instrumental in finding the best solution. Rest assured, I prioritize transparency and will keep you informed as we adapt our strategy based on your insights.”
A number of platform users have voiced several worries regarding the process of compensating victims from the recent hack, as depicted in the X post down below. (or simply: Some users on the platform have expressed concerns about how they’re being reimbursed following the hack, as shown in the X post.)
Wazirx, could you please inform your users about the exact amount of reserves you have left, including specific tokens that might have been compromised? Moreover, why aren’t withdrawals being initiated at this time? It seems unfair to keep buying time, as it doesn’t take this long. What is the reason for the delay? #WazirxHack
— सच्च तक (@TakaSacca19744) August 3, 2024
Some individuals assert that the platform tends to select which questions it responds to, often omitting crucial topics altogether.
Wazirx team, What is this behavior
— Neel (Crypto Jargon) (@Crypto_Jargon) August 3, 2024
Experts in cryptocurrency security and investigators have provided theories about the circumstances surrounding the hack, with one such theory presented by analyst X at BoringSleuth, often referred to as TruthLabs. In fact, this individual had previously expressed reservations about WazirX’s operations just prior to the incident.
They had issued a warning regarding a security vulnerability affecting multiple layer 2 blockchains, including Blast, Optimism, Mantle, and Coinbase’s Base.
TruthLabs posits that these platforms employ multi-signature contracts akin to those used by WazirX, which could potentially put at risk vast amounts of users’ assets worth billions of dollars.
A thread detailing potential deceptive practices and security flaws at WazirXIndia, which may have resulted in customers losing approximately $230 million worth of assets. Here’s the breakdown:
— TruthLabs 🫡 (@BoringSleuth) August 1, 2024
The examination revealed that the deployer address of WazirX primarily moved funds to just three recipients: a Binance account, a burn account, and a SwipeX agreement—all supposedly tied to the washing of illegally obtained money.
In response to TruthLab’s claims about security breaches, the Indian cryptocurrency exchange asserts its innocence. They maintain that they have always utilized a system with several key holders, rather than admitting any fault or lapse in security.
Is Binance to blame?
According to the security expert’s viewpoint, there’s a strong possibility that the primary WazirX exchange account, created in 2022, may have been linked to a Binance account with a history of fraudulent activities and theft before.
It seems possible that WazirX and Binance, as they’ve stated, haven’t completely cut all their connections, according to the detective’s suggestion.
In 2019, Binance initially announced they had acquired India’s top digital asset platform, WazirX. However, they later corrected this statement, explaining that instead, it was a deal for the purchase of specific assets and intellectual property belonging to WazirX.
2022 saw Binance, the leading global cryptocurrency exchange, express that any developments affecting it would have a significant ripple effect across the entire crypto market.
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2024-08-04 14:36