WazirX Users Fume as Cyberhack Fallout Drags On

• India’s largest exchange, WaxirX, suffered a major cyberattack in July.
• The exchange is accused of putting itself before users. 
• With no resolution in sight, some WazirX users feel angry and frustrated.

Crypto hacks continue to plague the digital asset industry, with a staggering $1.7 billion stolen through malware, social engineering, and code exploits in 2023 alone. Unfortunately, the $235 million heist from WazirX users in July showed that 2024 is shaping up to be no different.  

The WazirX attack ranked as the second-largest crypto hack of 2024, surpassed only by the $305 million theft from Japanese exchange DMM Bitcoin in May. While DMM Bitcoin swiftly reassured its users by guaranteeing their deposits, WazirX has left its users in limbo for over a month, offering no clear resolution, fueling customer anger and frustration.

WazirX CEO Calls for Patience

As the WazirX hack situation continues to unfold, company CEO Nischal Shetty took to social media on Thursday to reassure users. Shetty announced that an update would be provided on Friday. He emphasized that the exchange is still finalizing its response and urged users to remain patient.

WazirX suspended user withdrawals on July 18 following the security incident, citing the need for thorough investigations. However, more than a month later, users’ funds remain frozen.

Shetty’s announcement was met with a barrage of angry and frustrated responses from WazirX users, with some sharing concerns about the impact of the situation on their mental health. In contrast, others demanded immediate access to their locked funds.

On Thursday, WazirX announced that it had forcibly closed all open trades on its platform, claiming this was part of its resolution process. However, this action has only further inflamed users’ already heightened frustrations, who continued to vent their anger over frozen withdrawals.

The prolonged uncertainty surrounding the fate of user funds has led to severe criticism of WazirX’s management of the situation.

Will Users Be Forced to Eat Losses?

WazirX has remained active on social media since the cyberattack. However, critics have voiced concerns about the updates and proposals the exchange has floated. 

On August 3, the exchange proposed a controversial ‘socialized loss’ strategy, which aimed to distribute the impact of the stolen funds across all WazirX users. This proposal faced immediate backlash from the community, leading to its swift withdrawal.

Content marketer Uddalak Das highlighted numerous issues with the ‘socialized loss’ proposal, chief of which was the argument that users not affected by the hack should not bear the burden of the losses.

Das characterized this proposal as prioritizing the company’s financial interests over those of its users, a sentiment echoed by many in the crypto community.

Further complicating matters, WazirX recently attributed the cyberattack to security flaws in its wallet provider, Liminal Custody. However, Liminal Custody swiftly denied these allegations, insisting that their systems were uncompromised.

Liminal Custody suggested that the breach originated from within WazirX’s internal operations processes, adding another layer of complexity to the ongoing investigation and recovery efforts.

On the Flipside

• Following attempts to ban crypto, Indian authorities are generally regarded as anti-crypto.
• This situation re-affirms the dangers of keeping funds on centralized exchanges.
• North Korea hacking group Lazarus was blamed for the WazirX attack.

Why This Matters

As the WazirX saga unfolds, it underscores the crypto industry’s general lack of transparency and robust security measures.

WazirX assured users of a swift resolution to the cyberattack on August 8:
WazirX Nears the Completion of ‘Restoring’ User Balances Post $230M Hack

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