Indian cryptocurrency exchange CoinSwitch has announced a Rs 600 crore recovery programme, less than one-third of the money lost during the breach, with no clear plans to refund the remaining 70% of the stolen funds.
The initiative aims to aid users of WazirX, a crypto platform recently plagued by operational and security challenges. This recovery fund, financed entirely from CoinSwitch’s cash reserves, will be disbursed over two years in a mix of Indian rupees and cryptocurrency equivalents.
The programme is designed to compensate WazirX users who lost their money in July 2024’s security breach that led to losses exceeding $230 million.
The recovery programme will disburse less than a third of the money lost during the WazirX hack.
Neither WazirX nor Coinswitch have mentioned any information about the remaining 1375 crore (70% of the hacked funds) lost in the breach, as the people who lost their money remain in limbo.
Regarding the programme, Ashish Singhal, co-founder of CoinSwitch, highlighted its user-friendly structure, “The amount is in INR or crypto deposited from CoinSwitch directly into a user’s account with no lock-in. They will get it into their wallet with which they can deposit it back to their bank accounts, sell it, or trade. Once WazirX opens crypto withdrawals, the programme will disburse based on those crypto deposits.”
The programme will provide users with staggered payments and additional incentives such as:
- An upfront sign-up reward of up to 10% of deposited funds.
- A referral reward of up to 5% for users who bring other affected WazirX customers into the programme.
- A share of the trading revenue generated by CoinSwitch’s recovery initiative is distributed proportionally to user losses.
The incentive and staggered payment would make it seem like WazirX is doling out rewards for free — rewards for referring others affected has got to be a PR joke that slipped out into the wild — but all this while WazirX, aided by Coinswitch, is only returning a fraction of the people’s money that they couldn’t safely keep in the first place.
CoinSwitch, which boasts a user base of over 20 million, plans to target approximately 4 million Wazirx users through this initiative. The company will assess affected users by reviewing their balance statements to estimate losses and determine eligibility for compensation.
“Once WazirX opens crypto withdrawals, it will become easy to track the user claims that customers bring to our platform. We will know the assets under management (AUM), and calculate rewards on top of it,” Singhal explained.
This recovery programme aligns with a broader resurgence in cryptocurrency, driven by a significant uptick in virtual digital asset (VDA) prices. Bitcoin, for instance, recently achieved an all-time high of $108,319. CoinSwitch is leveraging the positive market sentiment to reinforce its position in the Indian crypto ecosystem.
“We have about five years of runway from where we sit. The current Bull Run has only helped us get even more value into the ecosystem. We are funding this programme directly from our pockets,” Singhal added.
Recently, news reports emerged that M Hasan, the main suspect of WazirX hack, has reportedly fled to Bangladesh.
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