WazirX Crypto Exchange Unveils Recovery Token Plan for Creditors

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As an analyst with over two decades of experience in the financial sector, I’ve seen my fair share of hacks, breaches, and market turbulence. The recent announcement by WazirX regarding their Recovery Token to settle outstanding debts due to the hack is an innovative approach that, while not unheard of (as Bitfinex demonstrated back in 2016), still manages to impress me with its audacity and commitment to creditor repayment.

In simpler terms, following the recent hack where over $230 million worth of cryptocurrency was stolen from WazirX, the exchange is planning to introduce a Recovery Token as a means to repay their outstanding obligations to affected parties (creditors).

As a crypto investor, I was thrilled to learn about the upcoming token airdrop, which is proportional to my current balance on their platform. This presents a practical opportunity for me to recoup my investments, making it an exciting development in my portfolio.

WazirX Proposes Recovery Token for Debt Settlement

WazirX has announced they will distribute a “Recovery Token” to repay debts owed to platform users. This token will be distributed based on each user’s account balance, ensuring a fair distribution. The Recovery Token offers a structured method for users to recover their funds through various creative avenues.

Recovery Token for Outstanding Debt Settlement

As a crypto investor, I’m excited to share that we’re preparing for the release of a Recovery Token. This token will be distributed among our creditors, according to the amount they owe or hold on our platform. This move is designed to foster trust and transparency in our community.

The Recovery token will offer a path to recovery through:

1⃣ Future platform profits…

— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) November 6, 2024

The Recovery Token’s key items include projected revenue ranges that highlight potential future profitability for the platform. Strategic business initiatives and the sale or liquidation of assets held by third parties are also part of the plan. Additionally, there will be efforts to recover stolen assets, along with potential “White Knight” proposals for new capital injections.

One important function of Recovery Tokens for lenders is their buyback option, which primarily aims to enhance recoveries and allows the platform to capitalize on market growth. This feature additionally grants lenders extra liquidity since they can sell the tokens on the open market. This flexibility benefits the lender, offering them an opportunity to secure funds earlier based on market conditions.

WazirX plans to share additional details about the workings and specifics concerning the Recovery Token. The Recovery Token is a distinctive token designed to address outstanding debts and demonstrate dedication towards creditor reimbursement.

North Korean Hackers Drain $234M

Day by day, hackers are becoming more creative and aggressive. Just recently, a UAE-based cryptocurrency exchange named M2 suffered a cybersecurity breach, leading to the loss of approximately $13.7 million in digital assets. It seems that WazirX’s decision to take steps might provide assistance for their colleagues in the UAE to implement measures aimed at safeguarding investors.

This summer, the Indian cryptocurrency exchange WazirX suffered a massive loss of approximately $234.9 million in investor funds due to a devastating hack. On July 18, 2024, WazirX ceased its operations. Coincidentally, on the same day, July 18, 2024, cybercriminals from the Lazarus Group of North Korea transferred $234.9 million worth of cryptocurrency assets from WazirX to a newly created wallet address.

Five individuals, three from WazirX and one from Liminal, were responsible for securing a multi-signature wallet, with transactions requiring approval from three WazirX signatories and one from Liminal. Malicious actors successfully created a fraudulent account on WazirX, transferred some tokens, and started purchasing Gala tokens. Upon emptying the hot wallet, they gained access to the cold wallet. The attackers then exploited the smart contract within WazirX’s multi-signature wallet by bypassing the requirement for WazirX’s keys, thus taking full control over the funds due to gaining unauthorized control themselves.

On July 18, 2024, WazirX temporarily halted cryptocurrency trading. Then, on August 29, 2024, competitor exchange CoinSwitch brought legal action against them with the aim of retrieving approximately $9.65 million that was stuck in their system.

Bitfinex’s Recovery Token Precedent

In 2016, just like Bitfinex did, a virtual currency exchange based in Hong Kong may have responded similarly when it was hit by a massive cyber attack. The incident involved approximately 2,000 confirmed transactions being hacked from users’ wallet accounts and transferred to a single address in August of that year. This breach significantly impacted the exchange’s operations.

Upon discovering the security incident, I quickly observed a plunge in cryptocurrency trading prices by approximately 20%, reducing the value of the stolen funds to around $58 million. In response, Bitfinex promptly halted all Bitcoin withdrawals and trading activities.

The platform reduced all account balances by 36% and issued BFX tokens to both customers who were hacked and those unaffected. These tokens represented a claim on Bitfinex’s future income or assets, serving as a way for affected customers to recover their losses. However, despite using BitGo’s multi-signature technology to secure funds, Bitfinex eventually faced limitations in making U.S. dollar payments.

Back in July 2023, I was thrilled to learn that my funds, stolen from me back in 2016 during a hack on Bitfinex, had been recovered – a total of around $315,000 in both cash and cryptocurrency. This successful recovery was made possible through the collaboration between Bitfinex and the US Department of Homeland Security.

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2024-11-06 17:20