A $230M Hack and a Botched Response

• WazirX delays resolving the $230M hack, with customers’ funds still frozen.
• Mystery of Crypto criticizes WazirX for blame-shifting and poor communication.
• WazirX’s “socialized losses” program offers 55% fund access, sparking user backlash.

Pseudonymous crypto trader Mystery of Crypto has blasted WazirX’s response to the security breach that cost over $230 million in digital assets. The trader said that, unlike other exchanges that acted quickly after being hacked, WazirX has dragged its feet on fixing the problem and instead opted to shift the blame.

The trader pointed out how Binance, KuCoin, and BingX quickly compensated users after hacks. Binance, for example, reimbursed users within days after a $570 million breach in 2022. KuCoin did the same after its $280 million hack in 2020, and BingX allowed withdrawals within 24 hours of a $42 million attack earlier this year.

In contrast, WazirX has left customers with frozen funds and little communication since the July 2024 hack. At first, WazirX blamed the breach on a vulnerability in its custody provider, Liminal Custody. However, Liminal has denied any involvement, and an audit by Grant Thornton later found that the incident was beyond its control.

Read also: WazirX Hacker Cashes Out: $6.5M ETH Moved to Tornado Cash

Meanwhile, WazirX CEO Nischal Shetty claimed that Binance shares responsibility for the breach. Binance has strongly denied these accusations, stating it neither owned nor operated WazirX at the time of the attack.

There has also been speculation about possible insider involvement, as on-chain data and investigations by Delhi police have raised red flags. To recover the stolen assets, WazirX has offered a reward of $23.4 million—10% of the stolen funds—to anyone who can provide leads. But, tracing the funds is difficult because Tornado Cash was used.

Controversial “Socialized Losses” Program

Adding to the trouble, WazirX introduced a “socialized losses” program in late July. The program suggested that users could access only 55% of their funds, while the remaining 45% would be converted into USDT-equivalent tokens.

Read also: WazirX Hackers Are Still at It – Another $12M Vanishes into Tornado Cash

Users were given two options: either access 55% of their funds for trading with priority for recovery or withdraw the same percentage over time with lower recovery priority. This plan was widely condemned, as many customers felt the exchange was making them bear the cost.

As of now, WazirX has not provided clear solutions to users, leaving funds trapped and concerns growing.