How WazirX Plans to Recover $235 Million: Townhall Meeting Highlights

WazirX, one of India’s leading cryptocurrency exchanges, held its first townhall meeting on YouTube following a significant security breach that resulted in the loss of $235 million. The meeting aimed to provide transparency and update users on the ongoing efforts to recover stolen funds and enhance security measures.

Leadership Addresses the Crisis: An Overview of the Hack

During the townhall, key figures including Jason Kardachi, Managing Director of the Restructuring Business, George Gwee, Director, and Nischal Shetty, founder of Zettai, the company that took over WazirX, discussed the circumstances surrounding the hack. They emphasized the severity of the breach and the ongoing investigation to determine how hackers bypassed the exchange’s four-step signature authentication process, designed to protect cold wallets holding Ethereum and ERC-20 tokens.

The attack was traced back to a blind-signing vulnerability during a transaction on the Liminal platform, a third-party security provider. Despite having robust security protocols in place, the blind signing process allowed hackers to initiate unauthorized transactions without being detected, highlighting a critical weakness in the system. The WazirX team is actively working to understand the full extent of the breach and prevent future incidents.

Also Read: WazirX Finds No Internal Compromise in $230M Hack, Blames Liminal

Legal Protections and Financial Recovery: WazirX’s Next Steps

In response to the hack, WazirX has taken legal action to safeguard its assets and provide a framework for recovery. On August 27, the Zettai team applied for a six-month moratorium in Singapore. This legal move is not an indication of insolvency or bankruptcy but rather a protective measure to pause legal actions against the company, allowing time to restructure and recover stolen funds.

The moratorium has granted the company 30 days of legal protection, during which they are seeking creditor support for their restructuring plans. As part of this process, WazirX is proposing a restructuring of crypto balances under Singapore’s Scheme of Arrangement, giving users with crypto holdings a say in the recovery process.

Ongoing Efforts to Recover Stolen Funds

The townhall meeting also highlighted WazirX’s multifaceted approach to recovering the stolen assets. Jason Kardachi outlined the plan to distribute the remaining tokens equitably among users, emphasizing that these distributions would be made in cryptocurrency rather than fiat currency. The recovery strategy includes engaging with investors and potential partners who can provide capital to bolster the exchange’s financial standing.

Nischal Shetty provided updates on the status of INR withdrawals, which have resumed on the platform. While INR funds were not affected by the hack, they have been partially frozen due to ongoing investigations by Indian law enforcement agencies. The withdrawal process will occur in two phases, with users able to access a portion of their funds until the investigations are resolved.

In parallel, WazirX has reached out to over 500 cryptocurrency exchanges to block wallet addresses linked to the hack. The team is collaborating with cybercrime units in India and Singapore to trace and freeze stolen assets, though they cautioned that the full recovery of funds remains uncertain.

Looking Ahead: WazirX’s Commitment to Security and User Trust

As WazirX navigates this challenging period, the exchange’s leadership has reaffirmed its commitment to enhancing security and rebuilding user trust. The townhall concluded with a call for patience and support from the user community as WazirX implements its recovery and restructuring plans.

The incident has underscored the importance of robust security measures in the cryptocurrency space, and WazirX’s response will likely serve as a case study for other exchanges facing similar threats.

Also Read: India’s CoinDCX Establishes $5.9M Investor Protection Fund Following WazirX Hack