WazirX Considers Plans To Distribute $230-Million Cyberattack Losses Among Users Following Outrage, Co-Founder Promises To Explore All Options
WazirX co-founder Nischal Shetty took to X to confirm that the proposal is not final and that the opinion poll was primarily to understand the best possible way to go forward.
Mumbai-based cryptocurrency exchange WazirX is facing backlash from its users after announcing a controversial plan to distribute the $230 million loss from a recent cyberattack among its customers. The platform, which suspended trading last week due to the heist, intends to resume operations within a week and has proposed a "socialised loss strategy" to manage the impact.
The proposal has been met with criticism, with many users questioning why WazirX is not using its profit reserves to absorb the loss. Instead, the exchange plans to share the financial burden with its customers.
Following the outrage, WazirX co-founder Nischal Shetty took to X to confirm that the proposal is not final and that the opinion poll was primarily to understand the best possible way to go forward.
Here's what Shetty said:
Quick update about the poll. Your suggestions and feedback is how we'll be able to find a feasible solution 🙏 https://t.co/StawTcB1BP pic.twitter.com/XkLs5Jlmx9
— Nischal (Shardeum) 🔼 (@NischalShetty) July 29, 2024
What Was The '55-45' strategy?
According to WazirX, a socialised loss strategy involves spreading the losses from incidents like cyberattacks across all crypto portfolio users. This method aims to minimise the financial impact on any single individual by distributing it more broadly.
WazirX detailed its strategy, explaining that users with 100 per cent of their tokens in the 'not stolen' category would get back 55 per cent of those tokens. The remaining 45 per cent will be converted to USDT-equivalent tokens and locked. This approach was intended to be fair and transparent, redistributing the deducted tokens to rebalance other users' portfolios who have a higher percentage of stolen tokens.
For users whose entire portfolios consist of stolen tokens, WazirX said it would create a balanced portfolio for their unlocked portion (55 per cent) using a basket of available crypto assets on the platform.
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