 "WazirX")
Last week, WazirX temporarily suspended trading and withdrawals for users on its platform.
WazirX, the crypto exchange platform that lost $230 million to a cyberattack, is planning to seek assistance from the Financial Intelligence Unit-India (FIU-IND) as the company begins to roll out its plans to recover funds lost to the security breach this month.
This comes days after the platform, which has over 16 million registered users, lost about 45 per cent of its crypto assets to a security breach.
“We have raised a police complaint, and are in touch with FIU since WazirX is registered there. We have initiated discussions to see which agency can come in and help us with tracing funds, and how they will coordinate,” Nischal Shetty, founder and chief executive officer (CEO), WazirX, told Business Standard over a virtual call.
FIU-IND, an organisation under the Department of Revenue that investigates offences such as money laundering, has summoned senior executives of the company, said a senior executive at the company requesting anonymity.
“We have been called by the FIU-IND to provide an update on the $230 million hack case. Our compliance team and Nischal will join the meeting virtually,” the person added.
WazirX is also in touch with the US-based investigation agency, the Federal Bureau of Investigation (FBI), even as it coordinates with agencies in India.
“The tokens that have been stolen are lying with the attacker and are useless right now. The use comes only when you try to launder it in return for cash. With the FBI’s reach and trackability of crypto, if we know the exit point, the funds can be frozen, and the process can be done quickly,” Shetty added.
Last week, WazirX temporarily suspended trading and withdrawals for users on its platform. It announced its plans to ‘socialise the losses’ and distribute the impact of the heist across all its users, regardless of an investor being affected or not.
The platform’s users have raised their concerns on social media, urging the company to independently contribute to the losses from its own treasury and assets, and not rely on its users. “The first contribution to losses should ALWAYS come from the company (i.e. WazirX in this case) and the treasury and assets the company holds. I have not seen any such commitment from the company side, instead making customers directly absorb the 45% losses is utter nonsense,” said Sumit Gupta, co-founder of CoinDCX, a competitor of WazirX, in a post on X.
Shetty argues that his strategy to distribute the impact of the losses across its user base could accelerate the resumption of services on the platform.
“If you look at all of the other insolvencies, it is a long process taking five to ten years for it to come to a conclusion. We asked ourselves if we can expedite this as the biggest request that came after the hack was to restart the platform since we have 55 per cent of the remaining fund,” he added. The poll that is being conducted by WazirX for the choice of recovery will end on August 3.
He has indicated that the platform may look to tap into other ways of raising the amount lost to the attack, such as future profits of the exchange, new projects, and a way to bring potential investors to fund the company.
“When we work on this recovery process, we are looking at the profits of the exchange, future revenues, new programs that we launch in terms of a new project where we can create tokens, or a potential investor comes in,” he said.
First Published: Jul 30 2024 | 4:50 PM IST
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