WazirX Faces Backlash Over Recovery Poll After $230M Hack

Indian cryptocurrency exchange WazirX is facing significant backlash from customers and industry players over its Withdrawal Management Programme: Opinion Poll following a $230 million hack earlier this month. The hack affected 45% of user funds. It prompted the exchange to seek user input on recovery options.

On July 27th, WazirX launched a poll described as a "socialized loss strategy to distribute the impact equitably among all users." It asked customers to choose between two options. They could access 55% of their funds without withdrawals but with first priority for potential recovery. Or they could access 55% of their funds with withdrawals but with a second priority for potential recovery. The poll quickly drew criticism. Accusations emerged that it was designed to force users into choosing a specific option.

Co-founder Nischal Shetty and the exchange clarified on social media platform X that the poll was "not legally binding." It was merely a preliminary step to understand customer opinions. They announced plans to launch a feedback form to gather more ideas.

However, damage was done. Co-founders of rival cryptocurrency exchanges and numerous customers voiced their dissatisfaction. Arjun Vijay of Giottus criticized the poll. He said it was "not in the best interests of the ecosystem." Sumit Gupta of CoinDCX stated that WazirX's handling of the situation "isn't community first." He added it is "hurting other ecosystem participants." Dr. Sathvik Vishwanath of Unocoin said that the approach is "worsening the situation."

Critics labeled the strategy as "socialized loss, privatized profits." They questioned the fairness of penalizing users with non-stolen tokens. One customer asked "Is this even legal?" while another questioned, "How is this even fair?"

In an additional twist, WazirX reportedly approached former partner Binance for help in bailing out affected customers. Meanwhile, Indian news outlet The Print reported that India’s Enforcement Directorate (ED) had placed nearly $1.1 million in seized crypto assets in a WazirX wallet in January. This occurred months before the hack.

In conclusion, WazirX's attempt to manage the fallout from a $230 million hack through a user poll has backfired. It has drawn heavy criticism from both customers and industry leaders. The exchange must navigate the backlash. It needs to find a more acceptable solution to recover from the hack.