As a seasoned crypto investor with years of experience navigating the volatile and complex landscape of digital currencies, I have always valued transparency as the cornerstone of trust when it comes to exchanges. WazirX’s recent handling of the hack incident has left me deeply disappointed and concerned.
The foundation principle of blockchain technology is transparency. This is what crypto exchanges have sold to millions of devoted fans, scaring them with the bogeyman of the traditionally obscure banking system. So, the community was naturally enraged when WazirX exchange management decided to ignore the transparency model in their post-hack response to 4.4 million users.
Rather than keeping an open dialogue and ensuring transparency with their users following a significant hack that led to the loss of approximately ₹2,000 crore (equivalent to 45% of user holdings), WazirX found themselves in a situation where a judge had to intervene to demand clarification.
On Thursday, judicial commissioner Kristy Tan of Singapore Courts granted a moratorium request by WazirX co-founder Nischal Shetty regarding the company Zettai, providing a four-month reprieve for Shetty and the exchange management team from any potential legal consequences.
In the court ruling, Judge Kristy Tan additionally set forth four requirements for Shetty to meet within the subsequent six weeks.
- Publish Wallet Addresses of WazirX through court affidavit.
- Public Book of Accounts of WazirX through court affidavit.
- Respond to users’ queries and grievances.
- Run a poll seeking support for the restructuring process on an independent platform.
As a researcher, I find myself reflecting on the situation of WazirX as a cautionary tale within an industry founded upon the principle that “code is law.” Decentralized systems, which are designed to promote transparency, should be the cornerstone of this sector. However, when trust is shattered, it can erode users’ faith and tarnish the platform’s standing.
Instead of disclosing information to its users promptly after a hack, WazirX postponed transparency measures for an indeterminate period until they were legally required to do so by the Singapore High Court. This raises the question: Was it necessary for a judge’s intervention before WazirX could deliver the transparency that its users had initially anticipated?
Initially, instead of swiftly addressing user concerns and clarifying the situation, WazirX leadership engaged in a round of accusations towards their former partner Binance and security partner Liminal Custody. This lack of transparency became apparent. It wasn’t until the intervention of Judicial Commissioner Kristy Tan from the Singapore High Court that WazirX was forced to take corrective action.
If we examine the four points set by the judge, they seem to align perfectly with what WazirX users have been requesting for the past couple of months. Yet, the exchange authorities have remained tight-lipped about their business operations, ownership disputes, the incident from July 18 hack, and any remaining cryptocurrency funds related to it.
Conclusion
In essence, since the hack, WazirX has fallen short in upholding transparency. Just like any other exchange, WazirX relies heavily on user trust. The crypto community, who invest their own money, anticipate exchanges to be more transparent. Unfortunately, WazirX’s lack of transparency not only tarnished its reputation but also compelled users to resort to legal measures in order to obtain fundamental information regarding their funds.
The Singapore High Court’s endorsement of the moratorium, coupled with the judge’s outlined four requirements, underscores the extent to which WazirX deviated from the fundamental principles of blockchain technology.
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2024-09-27 16:38