WazirX to 'socialize' $230M security breach loss among customers

Indian cryptocurrency exchange WazirX has announced a controversial plan to distribute the $230 million loss from a recent security breach among its customers. Following a cyber attack that compromised nearly half of its reserves, WazirX suspended trading activities and is implementing a "socialized loss strategy" to equitably share the impact among users. Customers will receive only 55% of their holdings back, with the remaining 45% locked in USDT-equivalent tokens, affecting even those whose tokens were not directly stolen. The breach involved the theft of over 200 cryptocurrencies, including popular tokens like Shiba Inu and Ethereum.

WazirX is offering two options for users moving forward: Option A allows trading and prioritizes recovery efforts but restricts withdrawals, while Option B permits trading and withdrawals but places users at a lower recovery priority. Users can switch between these options under certain conditions. WazirX founder Nishal Shetty stated that the firm did not insure customer funds, and recovery efforts may take years. The decision to socialize the loss has raised questions among customers, with some suggesting that the company should use its profit reserves to mitigate the damage. The breach exploited discrepancies in the multisignature wallet provider's interface, leading to significant losses for the exchange and its users.