WazirX Faces Community Uproar Over “Socialized Loss” Strategy After $230M Hack

Embattled Indian cryptocurrency exchange WazirX is facing a backlash after proposing a “socialized loss strategy” following a hack that caused $230 million in losses. 

The criticism erupted on July 27, when the exchange tabled a poll dubbed “Withdrawal Management Programme: Opinion Poll” with two options. 

The first allows users to access 55% of their funds for trading without the ability to withdraw, but they receive priority during the recovery process. 

The second option is for users to access 55% of their funds, with the ability to trade and withdraw, but they will receive secondary priority during the recovery process. 

45% of the remaining funds will be converted to USDT before being locked. 

WazirX Faces Community Backlash 

The poll attracted severe criticism from the exchange’s users, with one saying that users should not be punished over the company’s lack of robust security controls. 

“It was your responsibility to keep our funds safe,” said @MilanAr97154294 on X. “Since its your mistake u need to pay back our hard earned money. Raise funds, sell your properties give our money back to us.”

Other users also questioned the socialized loss strategy, given that only exchange users holding certain cryptos were affected. 

The hackers stole $100 million in SHIB, $11 million n MATIC, $7.5 million in PEPE, $5.7 million in USDT, and $3.5 million in GALA tokens. 

“Choosing to invest in a coin and losing the funds due to a hack is a risk the investors of said coin chose why should holders of other coins make up for them?” one user said. 

Sumit Gupta, co-founder of rival exchange CoinDCX, also slammed the poll, saying WazirX wanted to protect its business at the expense of customers. 

WazirX Responds 

WazirX defended itself in an X post, saying the poll was not legally binding. Instead, the exchange wanted to gather feedback from users before acting in the best interest of the community. 

The exchange’s co-founder, Nischal Shetty, also posted a video on X explaining why a socialized loss strategy was the best option. He noted that if users agree to the plan, the exchange will resume operations while exploring other ways to reimburse customers the remaining funds. 

The WazirX hack was attributed to the notorious North Korean hacking group Lazarus. 

Also Read: 

  • Hamster Kombat Airdrop, Potentially The Largest In History, Delayed As OKX Announces Pre-Market Futures Trading For HMSTR 
  • Bitcoin Tumbles Below $67K As US Government Moves $2B Silk Road Tokens Despite ”Never Sell” Donald Trump Pledge 
  • Pepe Price Prediction: PEPE Slumps 3% As This Upgraded Layer-2 Alternative Races Towards $7 Million

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