tl;dr
WazirX, a cryptocurrency exchange, plans to issue a Recovery Token to settle outstanding debts with creditors after a recent hack that resulted in the loss of over $230 million. The token will be airdropped to creditors in proportion to their platform balances, offering a route for them to recover f...
WazirX, a cryptocurrency exchange, plans to issue a Recovery Token to settle outstanding debts with creditors after a recent hack that resulted in the loss of over $230 million. The token will be airdropped to creditors in proportion to their platform balances, offering a route for them to recover funds. The Recovery Token will include projected revenue ranges, business initiatives, asset sales, and efforts to recover stolen assets. It also features a buyback mechanism to boost recoveries and provide added liquidity to creditors. WazirX will announce more details about the mechanics and specifics of the Recovery Token soon.
This approach is unique in resolving outstanding debt and demonstrates the exchange's commitment to repaying creditors. Additionally, the article discusses a recent cybersecurity breach at a UAE-based crypto exchange, the hack at WazirX, and a similar measure taken by Bitfinex in 2016 to issue tokens as a method of recovery for those affected by a hack.
WazirX has announced the issuance of a “Recovery Token” to settle outstanding debt on its books to platform creditors. It will be airdropped proportionally in favor of its creditors according to the balance amount within their respective accounts. It provides a systematic way for creditors to get their money back via multiple innovative channels.
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. A key use of the Recovery Token for creditors is its buyback mechanism. It usually aims to boost recoveries and enable the platform to capture market upswings. This feature also gives creditors added liquidity, as they can trade the tokens on the open market. This offers flexibility to the creditor. It also provides a chance to access funds earlier, depending on market sentiment. WazirX said it will announce more information about the mechanics and details regarding the Recovery Token. Recovery Token is unique for resolving outstanding debt and showing commitment towards the repayment of creditors.
Hackers are being more inventive and aggressive every day. Just recently, UAE-based crypto exchange M2 crypto exchange encountered a cybersecurity breach, resulting in the loss of $13.7 million in digital assets. Maybe this WazirX decision helps its UAE colleagues to do whatever they can to protect investors. In July this year, the India-based cryptocurrency exchange WazirX lost about $234.9 million in investors’ funds through a tremendous hack. On July 18, 2024, it folded its operations. On the very same date, July 18, 2024, North Korean hackers from the Lazarus Group moved $234.9 million in crypto assets from WazirX into a new wallet address. Five WazirX and one Liminal signatory secured the multisig wallet, requiring three WazirX and one Liminal signature to process transactions. The hackers created a fake account on WazirX, deposited some tokens, and began buying Gala tokens. Right after draining the hot wallet, they logged into the cold wallet. In doing so, the attackers manipulated the intelligent contract in WazirX’s multisig wallet; the need for WazirX’s keys became nullified as they would, in turn, gain complete control over the funds. WazirX officially shut down crypto trading on July 18, 2024. On August 29, 2024, rival exchange CoinSwitch filed a lawsuit against it to recover $9.65 million in trapped funds.
Hong Kong virtual currency exchange Bitfinex had taken a similar measure back in 2016 when it was facing a humongous hack. The announcement of 2,000 confirmed transactions hacked from users’ wallet accounts into a single address in August 2016 seriously affected the exchange. Within hours of the breach, cryptocurrency trading price nosedived 20% to shrink the value of the stolen money down to about $58 million. Immediately after noticing the breach, Bitfinex froze all Bitcoin withdrawals and trading. The exchange wrote down all account balances by 36% and distributed BFX tokens to both hacked and unaffected customers. These tokens were a claim on Bitfinex’s future revenue or equity and, therefore, a method of recovery for those affected by the hack. Despite securing the funds with BitGo’s multi-signature technology, Bitfinex’s access to U.S. dollar payments was eventually limited. In July 2023, Bitfinex, with the cooperation of the US Department of Homeland Security, recovered approximately $315,000 in cash and cryptocurrency hacked away in 2016.