WazirX Hack: 4.4M Users Locked Out, Rs. 2,000 Crore Stolen

On July 18, 2024, WazirX, one of India’s largest crypto exchanges, experienced a significant security breach resulting in the theft of Rs. 2,000 crore worth of crypto. This incident left over 4.4 million users locked out of their accounts, sparking widespread concern and dissatisfaction among the affected community.

The Supreme Court recently dismissed a petition filed by 54 WazirX users, seeking intervention in the ongoing restructuring process in Singapore and a thorough investigation into the exchange’s fund mismanagement. The court, led by Justice B R Gavai and Justice Augustine Masih, cited the absence of clear crypto regulations in India as the reason for dismissing the petition. This ruling highlighted the limitations of the current legal framework, leaving victims of crypto hacks with little recourse in the Indian legal system.

Ask Aime: What happened to WazirX's security breach?

In response to the hack, WazirX management proposed a restructuring plan to the Singapore Court, aiming to restore 85% of affected user funds by May 2025. The remaining 15% will be returned over the following 2-3 years, depending on the exchange’s recovery and future profits. While the restructuring plan has received support from over 93% of users, as indicated by a vote conducted in partnership with legal firm Kroll, the Singapore court’s approval is still pending.

Despite the legal hurdles, WazirX users are required to stay updated on the restructuring process, accept the plan, and possibly verify their accounts to claim their share of the 85% fund recovery. The exchange plans to recover the remaining 15% through future profits and successful financial recovery, returning the funds once the exchange is in a better financial position.

The WazirX case underscores the urgent need for a clear and robust cryptocurrency regulatory framework in India. While other countries have embraced pro-crypto policies, India’s regulatory stance remains largely outdated. The WazirX hack exposes how India’s failure to adopt progressive crypto laws leaves users at risk, preventing the sector from reaching its full potential. As the global crypto landscape continues to evolve, India risks falling behind if it does not address its regulatory shortcomings. The WazirX saga illustrates the challenges faced by users in a legal vacuum, emphasizing the need for stronger regulations to protect the growing crypto community in India.