WazirX is determined to try everything they can to return investors back the money that they lost from the infamous WazirX hack.
WazirX co-founder Nischal Shetty recently unveiled a mutitiered plan focused on helping creditors regain a portion of their funds.
The decision to launch a DEX is a response to the July 2024 WazirX hack - which drained the exchange of approximately $235 million in user funds - and should help eliminate the counter-party risk inherent in centralized platforms.
However, the proposal has met with widespread skepticism from the crypto community, who accused the exchange of hypocrisy and deceit.
The company plans to airdrop “recovery tokens” to affected creditors, enabling them to recoup up to 48% of their losses by trading these tokens on the platform. Token distribution will follow a pro-rata approach, aligning with the amount each user lost.
Aiming for a February 2025 relaunch, WazirX intends to re-enable trading and dedicate a portion of transaction fees towards buying back recovery tokens, bolstering the overall recovery strategy. As part of its plan to diversify revenue streams, the exchange will introduce features such as crypto staking, an OTC trading desk, and futures trading.
Additionally, WazirX is in the early stages of building a decentralized exchange (DEX) that will run in parallel with its current platform. This move aligns with the rising demand for self-custodial solutions, a preference echoed by Shetty as user calls for greater autonomy grow louder.
The DEX will introduce a native governance token that enables users to participate in governance and earn rewards, while also enhancing liquidity and user engagement. Revenue generated from the DEX will partially contribute to the recovery fund, and users will have the option to exchange their recovery tokens for the new DEX tokens.
Beyond these initiatives, WazirX is also exploring other avenues for recovery, including the sale of tokens held by third parties and securing potential investments from “white knight” investors. In a recent update on November 6, the company committed to ongoing legal actions aimed at reclaiming illiquid or stolen assets for the benefit of creditors.
But WazirX's effort to regain the trust of its users may be too little too late.
The exchange's handling of the hack has been opaque, to say the least, with users' assets being transferred to other platforms and the company undergoing restructuring in Singapore.
WazirX's founder, Nischal Shetty has also come under intense scrutiny for his company's failure to adhere to its user agreement, dealing with INR withdrawals and permitting the withdrawal of remaining crypto assets.
In Indian crypto community, in particular, has been vocal in its criticism of WazirX. Many accuse the exchange of perpetuating a "multi-level marketing scam."
Social media users have quickly pointed out some contradictions in Wazirx's proposal, with one user sarcastically remarking
"Fool me once, shame on you. Fool me twice, shame on me. Only fools will trust them."
Another user noted that WazirX had failed to manage simple centralized exchanges, making its promise to launch a DEX and compensate users seem far-fetched.
The controversy surrounding WazirX has also highlighted the need for greater transparency in the crypto industry.
The exchange's decision to turn off comments on its posting detailing the recovery plan has only added to the sense of mistrust, with users feeling their voices are being ignored.
As WazirX navigates the complex process of rebuilding trust with its users, it remains to be seen whether the exchange's promises will materialize into tangible results.
One thing is sure : the Indian crypto community will be watching closely, and any future missteps could severe consequences for the exchange's future.
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