WazirX Crypto Hack: $230 Million Loss

Indian cryptocurrency exchange WazirX has suffered a significant blow with the recent **crypto hack** that resulted in a loss of $230 million (approximately Rs. 1,900 crore). This incident, which occurred under the oversight of Liminal Custody, has left the exchange scrambling to recover and deal with the fallout.

• The hack involved a breach of one of WazirX's wallets, resulting in the theft of a significant portion of user funds.
• The **crypto hack** has drawn the attention of authorities, including the FBI, who are investigating the incident.

WazirX's Controversial Recovery Plan

In response to the **crypto hack**, WazirX has proposed a 'socialised loss strategy' to distribute the financial impact of the loss among its user base.

• The plan involves **equitably** distributing the impact of the loss across all users, regardless of whether they were directly affected by the **crypto hack**.
• This strategy has generated considerable controversy within India's **crypto** sector.

Details of the Socialised Loss Strategy

WazirX's strategy involves two options for its user base of 16 million, as outlined in a blog post on their website.

• Users whose funds were not stolen in the **crypto hack** will receive 55% of their tokens back.
• The remaining 45% of their tokens will be converted into USDT-equivalent tokens and locked.
• WazirX hopes that this strategy will balance user access to a portion of their funds while simultaneously working to recover the stolen funds.

Criticism of the WazirX Plan

Several industry stakeholders have voiced their opposition to WazirX's strategy. Arjun Vijay, Co-Founder of Giottus **crypto exchange**, described the plan as "atrocious" and accused WazirX of "blackmailing" its users.

• Vijay believes the plan forces users into a choice between voluntarily locking their funds or facing a lower priority for recovery in the future.
• Sumit Gupta, CEO of CoinDCX, another prominent **crypto exchange** in India, also criticized WazirX's approach, calling it "not community first" and potentially detrimental to the overall **crypto** ecosystem.

WazirX Defends Its Strategy

WazirX has defended its strategy, claiming that it is fair and transparent. The exchange highlighted instances of other **crypto exchanges**, such as Bitfinex, that have implemented similar approaches to address similar situations.

• The exchange emphasizes the equitable distribution of the impact across its user base.

The Lazarus Group Connection

The severity of the WazirX **crypto hack** has led to an international investigation. Cyber security firm Cyfirma has confirmed that North Korea's infamous **Lazarus Group** is responsible for the attack.

• The FBI has reached out to WazirX to gather details about the **crypto hack**.
• The involvement of the **Lazarus Group**, known for its history of high-profile cyberattacks, adds another layer of complexity to the case.

Impact on the Indian Crypto Ecosystem

The WazirX **crypto hack** has sent shockwaves through India's **crypto** sector, raising concerns about the security of digital assets. The incident has also highlighted the need for stronger regulatory frameworks and improved security practices within the **crypto exchange** industry.

• The controversy surrounding WazirX's recovery plan could have wider implications for user trust in **crypto exchanges** in India.
• The incident has sparked discussions about the responsibilities of **crypto exchanges** in protecting user funds from **crypto hacks** and the potential for future regulatory changes.