Nischal Shetty, CEO and founder of WazirX, which ceased operations five days after it was hacked in July 2024.
| Photo Credit: File photo
People who invested in WazirX, an Indian cryptocurrency exchange that was hacked, are now demanding that the platform allow trading by de-freezing wallets ahead of the next bull run in the crypto market. The investors are anticipating a crypto boom after April.
The exchange ceased operations five days after it was hacked in July 2024. The hack led to the loss of ₹2,000 crore. Despite the hack, the exchange remained operational for five days, accepting investments and failing to alert users.
WazirX has now outlined a refund scheme to compensate the investors whose money is stuck in the exchange. The investors are also furious about the company recently moving ₹600 crore from ByBit, another exchange hacked on February 21. A public service announcement by the Federal Bureau of Investigation (FBI) of the U.S. linked the hack to North Korea.
Mockbul Haque, who was trading Theta coins, told The Hindu, “I have been investing in WazirX since 2021, and my total investment is ₹2.20 lakh. After the hack, the wallet balance is ₹94,000. With the new refund plan, the exchange is offering to provide merely 85% of the wallet balance.”
He said that investors are now keen on the compensation programme and want the crypto entity to allow trading, at least ahead of the next bull run. “The investors are expecting a jump in the market after April. Otherwise, the investors would lose money.”
Mr. Haque said the exchange is secretive about keeping the funds in different exchanges, and everyone came to know about it only after WazirX moved funds from ByBit.
“The exchange has not offered any explanation as to why the funds were moved, and what it plans to do with them. The company must speak about this transfer and gain the confidence of investors,” he said.
Prithvik Aniket, another investor, said the transfer of funds is definitely suspicious, and Binance (another exchange), which had links with WazirX earlier, also flagged the issue. “The investors have the right to know why the funds were kept in ByBit, and whether these companies had any kind of agreement.”
Mr. Aniket is closely related to one of the founders of Router Protocol, a company that develops blockchain infrastructure. He said it is always convenient to blame outsiders for the hack. In the case of WazirX, an inside job cannot be ruled out, as it is nearly impossible for hackers to access the multisig wallet controlled by five WazirX and one Liminal signatures. “The exchange is blaming North Korea for the hack, and ByBit also did the same.”
WazirX scheme
Nischal Shetty, CEO and founder of WazirX, did not respond to calls and messages sent from The Hindu. However, a mail sent to investors, which was accessed by The Hindu, shows that users can now access their share of the Rebalanced Net Liquid Platform Assets (NLPA) directly through the WazirX app. If approved by creditors and sanctioned by the court, these assets will be distributed in the first phase. The voting on the proposed arrangement is scheduled to take place between March 19 at 2.30 PM IST (5 PM SGT) and March 28 at 2:30 PM IST (5 PM SGT).
Should the scheme become effective, the first distribution of assets is expected to be completed within 10 business days from the effective scheme date, with a tentative timeline set for April or May 2025. Initial projections suggest that creditors could recover approximately 85.3% of their balances in USD terms, derived from the Rebalanced NLPA.
Further distributions may follow in the form of Recovery Tokens (RTs), which will be issued on a pro-rata basis. These tokens will enable creditors to participate in future asset recoveries and share in the profits from the anticipated reactivation of the WazirX platform.
Published – March 06, 2025 02:58 pm IST
