Key Points
- Indian crypto exchange WazirX may fully repay victims of a $235 million hack, depending on creditors’ approval.
- Repayment could begin as early as April 2025 or be delayed until 2030, depending on the creditors’ decision.
Victims of a cyberattack on WazirX, an Indian cryptocurrency exchange, may soon be compensated for their losses from the $235 million hack that occurred in July 2024. The exchange recently presented a visual roadmap on X (previously Twitter), outlining two potential repayment scenarios. The timeline for reimbursements now depends on the decision of the creditors.
If creditors agree with the suggested restructuring plan, the recovery process could start as soon as April this year. However, if the majority turns down the proposal, repayments could be postponed until as late as 2030.
Details of the Restructuring Proposal and Repayment Terms
The restructuring plan, due for a vote in the coming weeks, needs the approval of more than 75% of creditors (by value) for it to be implemented. If ratified, the plan will commence in April 2025, initiating a range of recovery actions aimed at restoring trust and stability.
If the proposal is accepted, WazirX will resume trading operations and begin the first round of repayments within 10 business days of the plan’s activation.
The recovery strategy includes the following key components:
- Distribution of Net Liquid Assets: Initial repayments will be made by distributing recovered funds to affected creditors.
- Launch of a Decentralized Exchange: The proposal includes the creation of a decentralized exchange (DEX) to enable more transparent and efficient trading.
- Issuance of Recovery Tokens: Creditors will receive recovery tokens that can be traded on secondary markets, offering a way to recover some of their losses.
- Regular Token Buybacks: WazirX will conduct regular buybacks of recovery tokens using platform profits and new revenue streams, aiming to increase their value over time.
These measures are intended to not only repay creditors but also to rebuild the exchange’s operational framework and restore market confidence.
The Hack: Breach, Shutdown, and Legal Consequences
In July 2024, WazirX was the victim of a significant cyberattack, resulting in a loss of $235 million.
The breach was reportedly caused by internal system vulnerabilities that were exploited by the hackers.
Following the hack, WazirX suspended its operations, including Bitcoin and Ethereum withdrawals, as part of its emergency response and internal investigation. The suspension was intended to prevent further losses while the exchange worked to understand and address the breach.
Indian law enforcement agencies also got involved and initiated an investigation. During the investigation, it was concluded that the breach was not due to system vulnerabilities but was carried out through a deceptive scheme involving the sale of a fraudulent account via Telegram.
In November 2024, a man from the Bengal region was arrested by Delhi Police on suspicion of involvement in the theft.