As an analyst with years of experience in the volatile world of cryptocurrencies, I find myself constantly on the edge of my seat, waiting for the next big development. The recent WazirX townhall meeting was no exception. After the devastating hack that cost the exchange $235 million, it’s heartening to see them taking such proactive steps towards transparency and recovery.
One of the largest crypto exchanges has recently gone live on YouTube to run the first WazirX townhall meeting. This comes after the major crypto hack, losing $ 235 million from this Indian exchange. This WazirX townhall meeting was in an attempt to interact with the users and update them on the current situation of the exchange. With this, the official has shared many relevant information to keep the exchange users informed.
The Townhall gathering was led by Jason Kardachi, Managing Director of Restructuring Business, George Gwee, Director, and Nischal Shetty, founder of Zettai. They offered valuable information about the ongoing recovery process of cryptocurrencies following the WazirX hack. Topics covered included the reorganization of crypto holdings, a temporary protective measure, and other related matters.
WazirX Townhall Meeting Revealed The Reason Behind The Hack
Nischal Shetty has given a concise overview of the present state of the exchange following the cyber attack. What stands out most is his comprehensive explanation about the exchange itself and why the source of the problem at WazirX remains undetermined.
According to him, since the cyber incident on August 18, his team has been diligently investigating the breach. What’s most intriguing is understanding how hackers managed to bypass the four-level authentication process. The breach occurred in one of their cold wallets containing Ethereum and ERC-20 tokens. Notably, these funds were safeguarded by Liminal, a third-party security service, and required four signatures, three from WazirX and one from Liminal for verification.
During the hacking incident, the WazirX team observed a transaction involving Gala tokens on the Liminal Website. They proceeded to sign this transaction using a process called blind signing. However, it’s important to note that what appears on the screen afterwards might not necessarily be the ledger showing you; it could potentially be something else. The final verification came from the Liminal site, which is automated and ensures all security measures are met before displaying the results.
As an analyst, I’ve traced back an attack to a stage where it initially commenced, a period we refer to as ‘blind signing.’ Unfortunately, during this phase, our Liminal authentication team failed to recognize the anomaly.
WazirX Applied For a Moratorium In Singapore
On August 27th, the Zettai team submitted an application for a 6-month protective period in Singapore, known as a Moratorium. They clarified that this Moratorium, or any similar filings such as restructuring or Scheme, is not related to solvency or bankruptcy issues. Rather, they are seeking this protection to provide them with the necessary time and space to revise their proposals, allowing them to address any potential legal challenges without undue pressure.
1. In a recent WazirX townhall meeting, they requested an extension from the Singapore High Court to recover their funds. This request is covered by a Moratorium, which temporarily shields management from any legal responsibilities and was put into effect on August 27th. Now, these representatives are seeking backing from creditors since the moratorium seems beneficial for them, but it’s currently under review.
The team is also proposing a restructuring of the crypto balances under the Singapore Scheme of Arrangement (Scheme.)
Restructuring of The Crypto Balances
WazirX was launched in 2018 and later acquired by Zettai following Binance‘s seizure of its funds. The exchange has experienced a significant cyber attack that resulted in a substantial loss of cryptocurrency assets. Now, approximately two weeks after the incident, the team has disclosed critical plans for restructuring the digital currency holdings, which is being managed in Singapore under a court-approved arrangement.
At the WazirX townhall gathering, it was clarified that Zettai is seeking to reorganize its cryptocurrency holdings through a Scheme of Arrangements. What’s key to note is that they are diligently working on finding a swift resolution. Regrettably, it’s anticipated that resolving these matters will take at least half a year.
In this suggested reorganization, individuals using the platform who have cryptocurrency holdings would become unsecured creditors of Zettai, eligible to participate in voting for the restructuring plan.
How Will Recovery Take Place?
At the WazirX townhall gathering, Jason unveiled his strategy for distributing the leftover tokens (following the hack) fairly among all stakeholders in proportion to their holdings. Notably, this distribution will occur using cryptocurrency, not traditional money. Furthermore, he shared their plans to facilitate recoveries on the platform by engaging with investors and potential benefactors who might offer capital. This is intended to aid them as they seek new collaborations and partnerships for the future.
In conclusion, they plan to develop income-producing goods and strategies to boost earnings. These earnings will be shared with users to aid in their financial recovery endeavors. Moreover, they persistently strive to retrieve the embezzled funds.
Crypto Balance Are On Hold On WazirX Until A Solution is Found
Nischal, head of Zeitti, announced that users on the exchange can now make INR withdrawals. This is possible because the hack on WazirX didn’t affect the INR funds. However, please note that 34% of these funds are currently unavailable due to ongoing legal disputes and investigations by Indian authorities. This means that users can withdraw approximately 66% of their INR holdings at this time.
Instead, INR withdrawals will be carried out in two stages:
What’s The Status of Stolen Crypto Funds?
At the WazirX townhall gathering, it was disclosed that the team has attempted contact with over 500 cryptocurrency platforms to prevent certain wallet addresses linked to the hack. Furthermore, it was mentioned that some of the stolen funds have been located on external exchanges and are currently being frozen for security reasons.
The team has filed a police report (FIR) in India and is working closely with both Indian and Singaporean cybercrime units. Their primary focus, as they’ve made clear, is tracing the missing funds.
Yet, it’s been shared that they are making every effort to retrieve as much as possible, though it’s important to note that they can’t guarantee the full extent of their success.
Concluding The WazirX Townhall Meeting
The WazirX community gathering concluded, disclosing numerous crucial points to attendees. During this session, it was announced that the team has reached out to over 500 exchanges to prohibit trades involving certain crypto wallets under scrutiny. Furthermore, they have applied for a suspension period in Singapore, allowing them time to develop their restructuring strategies. The WazirX townhall meeting also made clear that the platform itself is not accountable for the WazirX hack. Yet, there’s still no update from Liminal, the external wallet security service provider, regarding this matter.
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2024-09-02 18:26