Cryptocurrency users affected by the hacking attack on WazirX in 2024 should consider voting in favour of the restructuring scheme put forward by the crypto exchange, experts told businessline. The restructuring offers a better outcome, they said, than liquidation, which is the only other alternative .
From March 19 evening to March 28 evening, crypto users affected by the $234.9 million (around ₹2,000 crore) loss last year will get to vote on how they want to recover their stolen assets. Under the restructuring scheme WazirX will refund around 85 per cent of the stolen assets using existing liquid assets and provide recovery tokens for the balance amount.
If the users vote “no” then it will go in for liquidation, in which case the recoveries will be lower.
According to Sidharth Sogani Jain, Founder of Crebaco and CEO of Blue Aster Capital, users are facing a difficult situation either way because they will have to bear a loss, either in terms of time or lose out on valuation. Talking about the liquidation alternative, he said, “The problem is that the wallet hacked was Ethereum but there were users who had bitcoins and will say they want the bitcoin equivalent value. That’s going to be a problem if the vote goes against the restructuring. Also the against option helps WazirX make money because then crypto assets considered will be as on date of hack whereas now crypto prices have gone up 35-40 per cent. So, users will not benefit from price rise of crypto.”
- Also read: Bitcoin falls below $80,000 as Trump’s crypto reserve underwhelms market, tariff anxieties loom
Similarly, Snigdhaneel Satpathy, partner at Saraf and Partners, also suggested that users should vote in favour of the scheme.
“If you vote yes, and the company actually recovers the losses, you are not just getting back whatever you would have lost right now but in times to come, you are also entitled to profit sharing. There will be at least some control over the outcome. Otherwise, the liquidation is you essentially stripping down the company of all its assets. Does it mean users will get 100 per cent satisfaction? Obviously not.”
Businessline also reached out to other crypto platforms like CoinSwitch and CoinDCX for a comment but the companies declined to comment.
Speaking to businessline, Nischal Shetty, founder of Wazir X, said that if the restructuring succeeds, users will get access to liquid and recovery tokens within 10 days of the scheme being effective, that can be redeemed over the next three years. Stating that other exchanges suffering such attacks take 3-5 years to recover funds, Shetty argued that the restructuring would be one of the fastest resolution in crypto history.
Regulation as safeguard against attacks
When asked whether users can do anything to protect themselves from such losses, Satpathy said there is nothing a user can do other than check the credibility of a company. In such a situation, he stressed on the need of some form of regulation of the sector.
“Even if it is to start off with a self-regulatory body, like a body can look at how advertising standards work and those who comply with those standards can get certificates. Investors can then look at those certificates and make an informed call,” he said.
Regarding crypto regulation, Jain said, “Without a regulator in place, all exchanges are prone to extreme risks.”
