WazirX's User Survey on Recovery Options After $230M Hack Sparks Outrage Among Customers and Industry

Industry and Customer Backlash

Indian cryptocurrency exchange WazirX faces severe backlash from the industry and its customers after conducting a "Withdrawal Management Programme: Opinion Poll" following a $230 million hack that impacted 45% of user funds earlier this month.

Socialised Loss Strategy

On July 27th, WazirX proposed a "socialised loss strategy" aimed at distributing the impact of the hack equitably among all users. Customers were asked to vote on two options: either access 55% of their funds without the ability to withdraw and get first priority for potential recovery proceeds or access 55% of their funds with withdrawal rights but receive second priority for any recovery proceeds.

Poll and Clarifications

WazirX's co-founder, Nischal Shetty, clarified in recent posts that the poll was "not legally binding" and described it as a preliminary step to understand customer opinions. He also mentioned that a feedback form would be launched soon to gather more ideas. However, this clarification came only after significant criticism from both industry rivals and customers.

Criticism from Rivals

Arjun Vijay, co-founder of Giottus, criticised the poll, claiming it "is not in the best interests of the ecosystem" and was designed to force customers to choose the less favourable option.

Sumit Gupta, co-founder of CoinDCX, stated that WazirX's handling of the situation "isn't community first," predicted it "won't go down well for them," and noted it is "also hurting other ecosystem participants." Dr. Sathvik Vishwanath, co-founder of Unocoin, commented that the crypto industry "is in trouble due to the event," and WazirX's response is worsening the situation.

Immediate Access and Future Recovery

WazirX defended its strategy, stating it allows immediate access to a significant portion of assets while maintaining the possibility of further recovery for those willing to wait.

WazirX's handling of the hack and the subsequent opinion poll has revealed significant missteps in both crisis management and community engagement. The approach has not only damaged the exchange's reputation but also raised widespread concerns within the cryptocurrency industry about its methods and intentions.