WazirX Faces Challenges After Cyberattack: Key Takeaways
In the aftermath of a devastating cyberattack that saw over $230 million in cryptocurrency stolen, WazirX, one of India’s leading cryptocurrency exchanges, is grappling with the aftermath as it works to rebuild trust with its users. The attack, which occurred on July 18, 2024, exposed a vulnerability in the platform’s multisig wallets, leading to a significant loss of ERC-20 tokens and highlighting the ongoing risks associated with digital assets and their management.
One of the major consequences of the attack is the depletion of WazirX’s reserves of ERC-20 tokens, which has rendered the exchange unable to resume cryptocurrency withdrawals. To address this issue, WazirX has announced plans to pursue a Singapore Scheme of Arrangement, a legal framework that will allow for an equitable distribution of remaining assets. However, this process will involve user voting and court oversight, potentially delaying access to funds for users.
Starting on August 26, 2024, WazirX users will be able to withdraw up to 66% of their INR balances in phases. The remaining 34% of INR balances are currently frozen due to ongoing law enforcement investigations, which are part of broader probes into third parties associated with the platform.
While the decision to pursue a Scheme of Arrangement offers a path to resolution, it also prolongs uncertainty for users eager to regain access to their funds. The formal approval process, including user voting and court oversight, could extend the timeline for any potential recovery.
Despite the challenges, WazirX is taking steps to address the situation regarding INR balances. Approximately 34% of INR balances are currently frozen due to regulatory challenges, but starting on August 26, users will be allowed to withdraw up to 66% of their balances in phases. The remaining frozen assets will become available once the investigations conclude.
As WazirX navigates this crisis, the exchange’s response will be closely watched as a litmus test for the broader cryptocurrency industry in India. The company’s ability to balance legal compliance, user satisfaction, and financial solvency will be crucial in determining its future and setting a precedent for how digital asset platforms handle large-scale breaches in the future.
