Key Points
- WazirX will resume INR withdrawals in phases from August 26, 2024, allowing users to access up to 66% of their INR balances over four weeks.
- The exchange plans to implement a Singapore Scheme of Arrangement to address the shortfall in cryptocurrency assets, aiming for an equitable distribution approved by users.
Indian cryptocurrency exchange WazirX has announced its strategy to address the aftermath of a devastating $235 million hack in July 2024. The company has outlined plans to resume Indian Rupee (INR) withdrawals and restructure cryptocurrency assets affected by the security breach.
Phased Resumption of INR Withdrawals
Starting August 26, 2024, WazirX will lift the suspension on INR withdrawals in a two-phase process:
- August 26 to September 8, 2024: Users can withdraw up to half the 66% of their INR balances.
- September 9 to September 22, 2024: Users can withdraw up to 66% of their INR balances.
This approach comes after carefully assessing the platform’s financial situation following the hack, which resulted in the loss of approximately 45% of WazirX’s reserves. The exchange has also announced a 60% reduction in withdrawal fees to facilitate easier withdrawals, from INR 25 to INR 10.
However, about 34% of INR balances remain frozen due to ongoing investigations by law enforcement agencies (LEAs) and disputes. WazirX emphasizes that these investigations target third parties, not the platform itself, and assures users that the frozen funds will be available once the investigations conclude.
Cryptocurrency Asset Restructuring
Addressing the more complex issue of cryptocurrency balances, WazirX revealed that the cyberattack resulted in a significant loss of ERC-20 tokens, leaving insufficient assets to meet user liabilities. To tackle this challenge, the exchange plans to pursue a Singapore Scheme of Arrangement, a legal process to facilitate an equitable distribution of remaining cryptocurrency assets.
This approach aligns with WazirX’s earlier announcement on August 8, 2024, where they committed to undoing all trades carried out after suspending withdrawals on July 18. The Scheme will allow users to vote on and approve a restructuring proposal, ensuring that the outcome is legally binding and reflects user preferences.
Context of the Hack
The July 2024 hack targeted WazirX’s multi-signature wallet on Ethereum, exploiting discrepancies between data displayed on Liminal, a digital custody platform, and actual transaction contents on WazirX. This incident has led to conflicting statements between WazirX and Liminal, with the latter arguing that their platform was not breached.
Looking Ahead
As WazirX navigates these challenges, the company has committed to regularly updating its user base. The platform will soon apply to the High Court of Singapore to secure the necessary time and legal protection to pursue the restructuring under the Scheme of Arrangement.
This development is critical for WazirX and the broader Indian cryptocurrency ecosystem. The exchange’s ability to successfully implement this recovery plan will be closely watched by investors, regulators, and industry observers, especially given the scale of the hack and its impact on user funds.
As the situation unfolds, users are advised to stay informed through official WazirX channels and to carefully review any communications regarding their account balances and withdrawal options.
