The recent $235 million hack of WazirX has raised many concerns and questions regarding the operations and ownership of the exchange. Co-founder and CEO Nischal Shetty has come forward to address some of these growing concerns. In response to inquiries on social media, Shetty revealed that he is still running the exchange “on their [owners] behalf until the dispute gets resolved.” When pressed for more details about how trades are being managed and how the exchange was able to reverse them, Shetty cited confidentiality obligations, stating that he couldn’t disclose more information due to these obligations.
The ownership dispute surrounding WazirX originates from a disagreement between the exchange and Binance, which made an acquisition offer in 2019. The details of the deal were not fully disclosed at the time, creating ambiguity around the ownership structure. In 2022, Binance’s former CEO, Changpeng Zhao, claimed that the acquisition was never completed and that Binance did not own any shares in Zanmai Labs. However, Shetty maintains that Binance controls key operational aspects of WazirX like its domain name and AWS servers. Despite this, Binance disputes full ownership of the platform. This ongoing ownership dispute, in addition to the challenges posed by the asset freeze and security concerns, has put pressure on WazirX to clarify its position and regain user confidence.
In an attempt to address the fallout from the hack, WazirX recently announced a phased withdrawal system for Indian Rupees (INR), allowing users to withdraw up to half of their available 66% INR balance limit. They also decreased withdrawal fees by 60%. Furthermore, a restructuring plan was introduced to tackle the aftermath of the breach. However, the specifics of this process remain unclear, with the exchange mentioning hindrances from “external parties.” Shetty assured users that more information about the restructuring plan would be provided next week and advised users to withdraw their funds for the time being.
Despite these efforts, the remaining 33% of funds are still inaccessible to users due to “massive INR freezes.” The timeline for crypto withdrawals also remains uncertain. Shetty explained that the asset freeze affects a portion of the exchange’s funds and is a problem that other Indian crypto exchanges are facing as well. This issue follows a previous security breach in July, which resulted in a $235 million loss. The hack was allegedly linked to North Korean cyber actors targeting one of WazirX’s multi-signature wallets. Since then, WazirX has released a preliminary incident report and filed a police complaint. However, claims from Liminal suggest that WazirX independently created the compromised wallet before importing it into their platform.
The ongoing concerns surrounding WazirX’s operations and ownership raise serious questions about the exchange’s future and reputation. With pressure mounting to clarify its position and restore user confidence, WazirX faces significant challenges ahead in regaining trust and stability in the crypto market. It remains to be seen how the exchange will navigate the ownership dispute, address security concerns, and overcome the aftermath of the recent hack.