The cryptocurrency exchange WazirX is grappling with significant customer dissent after a proposed plan to socialise its losses faced widespread rejection. However, the crypto exchange has made no statements regarding unlocking the assets, as decided in the poll. Users believe this is just another tactic to stretch the time until a possible solution can be worked out.
After this debacle, the company launches a feedback form for the crypto industry and customers to gain additional insights.
The loss socialisation proposal, which emerged in the aftermath of a crippling $230 million security breach, sought to mitigate the impact of the theft but has instead left the exchange back at square one.
The company tried many ways, from launching a bounty program to approaching Binance for help.
On July 27, about nine days after the hack, WazirX initiated a week-long poll to gauge customer opinion on a controversial plan to socialise the losses incurred from the hack.
The breach, which resulted in the loss of 45% of the exchange’s crypto assets from a compromised multi-sig wallet, forced the exchange to pause all withdrawals and trading activities.
The proposed solution by WazirX, also known as the 55/45 approach, would have allowed customers to access and trade only 55% of their assets while converting the remaining 45% into stablecoins (USDT) to be locked by the exchange, regardless of whether those assets were stolen.
However, as Moneycontrol reports citing an insider source, WazirX has decided to “go slow” on the 55/45 approach.
As expected, the public reaction was largely unfavourable. Users expressed strong disapproval, prompting the company to reevaluate its approach. However, it seems that the company knew what course the poll would take and hence tweeted, stating, “We want to clarify that this poll is a preliminary step to understand your opinions and is not legally binding upon the users or the WazirX platform. We reassure you that this poll is not final; it is designed solely to gather your feedback, better understand your views, and then take action that is best for the community.”
Two days after the poll’s launch, the company introduced yet another tactic: a feedback form. The objective of the feedback form was to collect more ideas from users and the industry.
Users are frustrated with WazirX’s snail-paced approach. Firstly, as some X users have pointed out, the company should release a detailed report on the stolen crypto amount, along with the remaining crypto amount, wallet addresses, and INR holdings.
Secondly, as the poll clearly expressed dissent with the 55/45 approach, the company should have worked quickly to restore the locked assets so that people could start trading or withdraw them.
Thirdly, converting and locking the coins in USDT has raised eyebrows. The company said that during a bear market (when prices are generally low), the value of cryptocurrencies can drop a lot, and in a bull market (when prices are high), their value can increase significantly. However, this is like swapping US Dollars with any developing nation’s currency. The dollar might grow in value over time, but it cannot be said about the other currency.
This explains why users are unhappy with WazirX’s plan to convert their assets into USDT. They’re worried that the value of their investments might not grow as much if they’re locked in USDT compared to their original cryptocurrencies.
As WazirX continues to grapple with this huge loss, the future of the crypto exchange remains uncertain. The backlash against the socialisation plan showed the company that users are not happy with the lacklustre approach and may take the legal route if the company doesn’t unlock the assets.
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