WazirX, a cryptocurrency exchange that was recently hacked for over $230 million, plans to issue a Recovery Token to settle outstanding debts with creditors.
The official announcement said that the token will be airdropped in proportion to creditors on their platform balance, which will offer a tangible route for creditors to recover funds.
WazirX Proposes Recovery Token for Debt Settlement
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.
Recovery Token for Outstanding Debt Settlement
We are working towards launching a Recovery Token. The token will be airdropped to Creditors proportionate to their balances on the platform.
The Recovery token will offer a path to recovery through:
1⃣ Future platform profits… pic.twitter.com/dNe0OBlPDj
— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) November 6, 2024
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.
North Korean Hackers Drain $234M
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.
Bitfinex’s Recovery Token Precedent
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.
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