WazirX To Dump the Plan Of Socializing Losses Following Heavy Backlash

The post WazirX To Dump the Plan Of Socializing Losses Following Heavy Backlash appeared first on Coinpedia Fintech News

On July 19th, WazirX experienced a significant security breach, resulting in the loss of over $230 million worth of cryptocurrency assets. 

WazirX To Distribute Losses Among Customers

WazirX announced on Saturday a controversial solution of distributing the loss among all customers. In a blog post last week, WazirX said that it is navigating the situation with transparency and fairness. It stated that the approach aims to distribute the financial impact equitably across all users. And unlike traditional recovery methods that can take years, this strategy offers a faster, more flexible solution. 

CoinDCX Criticizes WazirX

However, the exchange’s biggest rival, CoinDCX’s cofounder, urged WazirX to rethink its approach to managing the situation. He stressed that the way WazirX is handling this is not ‘community first’ and, in his opinion, this won’t go down well for them. He further added that the first contribution to losses should always come from the company, the Treasury, and the assets it holds. He said that he did not see any such commitment around this from the company’s side; instead, making the customers directly absorb the 45% losses was utter nonsense. 

He also warned that the incident could also negatively impact participation in the broader crypto ecosystem. WazirX’s socialized loss strategy has not gone well with users on the platform as well. 

WazirX To Ditch the Plan After Facing Criticism

However, the exchange has decided to dump its plan of socializing losses. The firm’s plan to socialize losses, also known as the 55/45 approach, has encountered severe backlash from the crypto community. 

This decision was proposed for every user, irrespective of whether their funds had been stolen. The plan’s unclear and ineffective rationalization has presented the crypto exchange with quite a backlash.

Nischal Shetty, the co-founder of WazirX, recently clarified that the poll was not legally binding but instead was intended to gauge community feedback. Additionally, the Indian cryptocurrency exchange also recently denied accusations of security lapses by TruthLabs that allegedly led to a massive $230 million hack.