India’s crypto space has already been pummeled by regulation, high taxation, and uncertainty around whether trading crypto is even legal in the country, but Indian crypto users have been dealt with yet another devastating blow.
Indian crypto exchange WaxirX has said that 45 percent of its users’ funds — amounting to around Rs. 2,000 crore — have been stolen by hackers. As a result, WazirX has blocked 45 percent of all users’ funds that were stored with the exchange. This means that unless WazirX can somehow recover the stolen funds, its 1.5 crore registered users have lost 45 percent of the crypto funds they’d stored with the exchange.
WaxirX says it has ensured that the stolen funds will impact all users uniformly, even if their specific funds weren’t stolen. “We are implementing a fair and transparent socialized loss strategy to distribute the impact across all users equitably…our 55/45 approach offers a faster, more flexible solution. This strategy allows immediate access to a significant portion of your assets while maintaining the possibility of further recovery for those who choose to wait,” it said.
“By socializing the loss, we ensure fairness across our user base and preserve the exchange’s stability. This approach balances quick access for some with potential recovery for others, aiming to resolve the situation more efficiently than traditional proceedings,” it added.
The loss of funds had been first reported last week, when WazirX had said that there had been cyber attack on its wallets. The money was removed by unknown hackers from the company’s accounts, and transferred elsewhere. The privacy built into cryptocurrency has made it very hard to trace the stolen funds, or to figure out who was behind the heist. WazirX for its part has created a bounty to help it recover the stolen funds. WazirX has announced that it will give away 10 percent of the total amount — Rs. 200 crore — to anyone who can help it get its funds back.
But it appears that as things stand, Indian users have lost Rs. 2000 crore in WazirX, which would make this one of the biggest financial loss events ever for Indian investors. Globally, crypto investors are no strangers to devastating losses — all the way back in 2014, the Mt. Gox hack had lost $460 million, and more recently, crypto firm FTX had imploded, and users had lost a staggering $1.7 billion. But with Indian users too seemingly now having lost $230 million on WazirX, it appears that Indian government’s restrictions on the entire crypto space — which were initially unpopular in the crypto community — might have saved millions of Indian investors from losing even more money in the controversial asset class.