Edited by Matt Waller
In an effort to mend trust after a high-profile cyber incident, cryptocurrency exchange WazirX has announced a bold asset rebalancing strategy. The proposal offers affected users up to 85% reimbursement of their portfolio value as of July 18, 2024—contingent on garnering at least a 75% approval rate from its creditors.
A New Chapter for Recovery
WazirX’s new plan opens the acceptance window for creditors until February 19. If the proposal is approved by the necessary majority, the first phase of reimbursements is scheduled to kick off in April. This initiative is designed to compensate victims of the July 2024 hack while paving the way for broader strategic reforms within the platform.
Key Elements of the Recovery Strategy
Should the vote swing in favor of the plan, WazirX intends to implement several forward-looking measures, including:
- Decentralized Exchange Launch: Rolling out a new DEX to diversify its service offerings.
- Issuance of Recovery Tokens: Creating tradable tokens to help offset the losses incurred.
- Periodic Token Buybacks: Conducting systematic buybacks funded by ongoing profits and emerging revenue streams over the next three years.
These steps are aimed at stabilizing the platform’s finances and restoring investor confidence.
The Risk of Liquidation
If the creditors do not approve the proposal, WazirX could be forced into liquidation under Article 301 of Singapore’s Companies Act. This outcome would likely prompt a rapid asset sale, potentially driving down the value of assets and leaving creditors with less than the proposed reimbursement.
A Costly Cyber Breach
The hack in question struck one of WazirX’s multisignature wallets in July 2024, resulting in the loss of significant digital assets: over $100 million in Shiba Inu (SHIB) tokens, $52 million in Ether (ETH), plus additional cryptocurrencies. At the time, these stolen assets represented more than 45% of the exchange’s total reserves as reported in June 2024. Investigations have pointed to the notorious North Korean hacking group Lazarus as the likely culprit behind the breach.
Looking Forward
WazirX’s comprehensive recovery plan not only aims to mitigate immediate losses but also to set a precedent for crisis management in the crypto exchange industry. By coupling substantial reimbursements with strategic initiatives designed to enhance operational resilience, the platform is striving to regain its standing as a trusted market player.
As the deadline for creditor votes approaches, all eyes will be on WazirX to see whether this ambitious plan will succeed in restoring stability and confidence among its users and investors.