Table of Contents
Dear WazirX Tribe,
In response to the recent cyberattack, which resulted in the theft of approximately $230 million—equivalent to 45% of our user funds—we are dedicated to navigating this situation with utmost transparency and fairness. We are implementing a fair and transparent socialized loss strategy to distribute the impact across all users equitably. In similar situations, users have often faced years of uncertainty and limited access to funds. Our 55/45 approach offers a faster, more flexible solution. This strategy allows immediate access to a significant portion of your assets while maintaining the possibility of further recovery for those who choose to wait.
By socializing the loss, we ensure fairness across our user base and preserve the exchange’s stability. This approach balances quick access for some with potential recovery for others, aiming to resolve the situation more efficiently than traditional proceedings.
Available Options for Managing Your Assets
To facilitate the management of your remaining assets, we offer two options. Each option comes with specific benefits and conditions. Our users can check the details within the WazirX app/website.
Points to Understand
Distribution of Funds
55% of user crypto assets will be made available for trading and/or withdrawals (depending upon the option that you select), while the remaining 45% will be converted to USDT-equivalent tokens and locked.
Balanced Portfolio
For both options, we’ll create a balanced portfolio for your unlocked portion (55%) using a basket of crypto assets derived from available crypto assets on the platform. If 55% of your unlocked portfolio includes affected tokens, we will balance it by replacing the affected portion with a basket of unaffected crypto assets available on the platform.
Recovery Efforts
We are committed to continuing efforts to recover the stolen funds. We will also explore options, such as airdrops and any other emerging ideas, as we continue on our path to recovery.
Portfolio Valuation
The value of the unlocked portfolio (55%) will be calculated based on average prices from CoinMarketCap and select global exchanges as of 21 July 2024, 8:30 PM IST.
Resumption of Operations
We will resume the operations of the platform shortly after the poll.
Action Required: Make Your Choice
WazirX registered users will receive an email with detailed instructions and a link to WazirX, where they can select their preferred option. Please ensure you complete this poll to have your choice recorded.
Important Notes:
- Deadline for Response: Please submit your choice by 03 August 2024, 07:00 AM IST.
- Poll Purpose and Considerations: This poll is not legally binding upon the users or the WazirX platform. A final decision on the way forward will be made after considering the results of this poll as well as additional considerations, including findings from ongoing investigations, the platform’s liquidity, and any evolving circumstances.
- Disclaimer: By participating in this poll, you acknowledge that you have read and unconditionally agree to the terms of the poll. You will continue to be bound by the WazirX Terms of Use.
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.
Thank you for your patience, understanding, and continued support as we work to secure your assets and restore normal operations. If you have any questions or need assistance, please do not hesitate to contact our support team.
Frequently Asked Questions (FAQs)
How will the 55% unlocking and 45% locking apply if I have multiple cryptos in my portfolio?
Assuming these are not tokens stolen in the cyberattack, the 55% unlocking and 45% locking will be applied proportionally to each crypto in your portfolio. For instance, if a user holds a mix of BTC, XRP, and other tokens, 55% of each token’s value will be unlocked, while 45% of each will be converted to USDT-equivalent tokens.
What will happen if all the tokens in my portfolio are the stolen tokens?
If your entire portfolio (100%) consists of stolen tokens, we’ll create a balanced portfolio for your unlocked portion (55%) using a basket of crypto assets. This basket will be derived from the available assets on the platform.
In other words, if all the tokens in your portfolio were among those affected by the recent cyberattack, the following steps will be taken:
- Unlocking of Crypto Assets: 55% of your unlocked crypto assets will be replaced with other token/s of equivalent value.
- Example: If your portfolio consists entirely of affected SHIB tokens, we will allocate replacement token/s equivalent to 55% of the value of your SHIB holdings. The value will be calculated based on average prices from CoinMarketCap and select global exchanges as of 21 July 2024, 8:30 PM IST. These replacement token/s will be available for trading and/or withdrawals (based on your choice), just like any other unlocked assets.
What will happen if my portfolio contains a mix of stolen and non-stolen tokens?
For portfolios with 45% to 99.9% stolen tokens, we’ll use a combination of the existing tokens available on our platform and create a balanced crypto basket to make up your 55% unlocked portion.
In other words, if your portfolio includes a mix of tokens affected by the recent cyberattack and those that are not, the following process will apply:
- Unlocking of Crypto Assets: 55% of the total value of the crypto assets in your portfolio will be unlocked for trading and/or withdrawals (depending upon your choice for Option A or Option B).
- Replacement of Stolen Tokens: Within the unlocked portion, any stolen tokens will be replaced with a basket of tokens of equivalent value available on our exchange. This ensures that users can still access the value of their stolen tokens through replacement token/s.
- Example: Suppose a user has a portfolio valued at 100 INR, with 60 INR worth of stolen tokens and 40 INR worth of non-stolen tokens:
- Total Value Unlocked in these options (55%): INR 55.
- Unaffected token value: INR 40, i.e. the value of the non-stolen tokens.
- Replacement of Stolen Tokens: Out of the total unlocked value of 55% which is INR 55, INR 15 (i.e. INR 55 – INR 40) will be replaced with the balanced crypto basket.
- Example: Suppose a user has a portfolio valued at 100 INR, with 60 INR worth of stolen tokens and 40 INR worth of non-stolen tokens:
The value will be calculated based on average prices from CoinMarketCap and select global exchanges as of 21 July 2024, 8:30 PM IST.
Will I be affected if I have only BTC and not ERC20 tokens?
Yes, the proposed plan affects all users holding any type of crypto assets, including BTC. The same approach will be applied to all crypto holdings, regardless of the token type.
If I hold only INR in my portfolio on WazirX, will I be impacted?
No, your INR funds will not be affected, nor will you be needed to vote. The 55/45 approach does not apply to your INR balances, as 100% of your INR will be accessible. Withdrawals will be enabled, subject to withdrawal limits.
How will this proposal affect a mixed portfolio of INR and crypto?
For example, if a user has INR 100 and crypto worth INR 20, the INR 100 will remain fully accessible (depending upon the option you choose). Of the crypto worth INR 20, crypto worth INR 11 (55%) will be unlocked for trading and/or withdrawals, while crypto worth INR 9 (45%) will be locked and converted to USDT-equivalent tokens. The value will be calculated based on average prices from CoinMarketCap and select global exchanges as of 21 July 2024, 8:30 PM IST.
What happens to the locked tokens?
Unlocking of locked tokens will be subject to ongoing recovery efforts. This includes tracing and recovering stolen assets, collaborating with partners to cover the deficit, and exploring compensation methods, including potential airdrops. Users who select Option A can benefit on priority from proceeds that we are able to receive (if any) from ongoing or future recovery efforts.
Why is 45% of my crypto portfolio locked if I only held non-ERC20 tokens unaffected by the hack?
While formulating the options for this poll, we’ve used principles from company restructuring to fairly distribute assets taking into account the higher risk that one set of customers will be taking against the others. Our aim is to maximize recovery and keep the exchange operational, preventing further losses. We have taken guidance from other crypto exchanges, such as Mt.Gox and Bitfinex, which faced similar challenges.
Mt. Gox
In 2014, Mt Gox was hacked, and 850,000 BTC (valued at $450 million) was stolen. The incident affected all users, regardless of the cryptocurrencies they held. Mt. Gox entered bankruptcy proceedings, and after years of legal processes, a civil rehabilitation plan was approved. As of 2024, 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.
Bitfinex
Bitfinex’s approach to their 2016 hack, where 119,756 BTC (about $72 million) was stolen, offers a notable example of creative problem-solving. They socialized the loss by initially spreading the loss across all user accounts, reducing balances by 36%, regardless of whether users held BTC or other crypto assets. Bitfinex also issued BFX tokens to affected users, with each token representing 1 USD of loss. BFX tokens served multiple purposes, such as they could be traded on the open market, users could use them as collateral for margin trading, and they could be held for future redemption. Users had the choice to convert their BFX tokens into shares of iFinex, Bitfinex’s parent company.
Remarkably, Bitfinex managed to redeem all BFX tokens within eight months, either through direct repayment or equity conversion. This approach allowed Bitfinex to continue operations while providing users with options and eventually making them whole.
How is the valuation of my crypto assets determined?
The value of your crypto assets will be calculated based on average prices from CoinMarketCap and select global exchanges as of 21 July 2024, 8:30 PM IST.
Will there be any updates or progress reports during the recovery period?
Yes, regular updates will be provided during the recovery period. Users will be informed of any significant progress, ongoing efforts, and plans for the future.
Check more FAQs here.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
