azirX, one of India’s largest virtual currency exchanges, is looking to restart trading by February 2025 after losing $235 million in a hacking incident. Co-founder Nischal Shetty announced at a town hall meeting. A recovery plan was unfolded with several facets toward compensating the victims and offering more value on the platform.
Recovery Tokens and Resumption of Trading
WazirX will issue "recovery tokens" to help creditors recover up to 48% of their lost assets to recover lost funds for affected users. Compensation will be on a pro-rata basis in that persons losing out could trade such tokens within the WazirX platform. By buying back these recovery tokens, the exchange intends to use part of the fees generated through trading to create revenue assigned for victim compensation.
The plan for WazirX includes the addition of new features in crypto staking, an over-the-counter trading desk, and futures trading. These initiatives are planned to ensure a rise in user interactions and maximum revenue generation that will become crucial for funding recovery efforts.
Creation of a Decentralized Exchange
In its defense of the users' growing demand for self-custody, WazirX said it is in the initial stages of building a DEX. The exchange will have a native governance token, which will be tradable and reward-bearing with active contributions toward liquidity. Part of the revenue to be generated from the DEX will also be channeled into recovery mechanisms for victims of the hack.
As a recovery strategy, WazirX is looking for partnerships with potential investors, or "white knights," that can provide further financing for it. The exchange is proceeding with aggressive legal steps toward the recovery of both illiquid and stolen assets, which would be securitized in favour of the affected creditors.
Regulatory Scrutiny and Legal Challenges
The announced recovery plan of the exchange comes when it is already under a good deal of regulatory scrutiny. It has been reported that the Financial Intelligence Unit of India launched an investigation against WazirX, further jamming the platform while it tries to regain user confidence and stabilize operations. A class-action lawsuit, filed by a coalition of victims with the National Consumer Disputes Redressal Commission in India, among other filings, has also been lodged with the Delhi High Court.
While WazirX has enabled customers to withdraw 55% of cryptocurrency and 66% of cash deposits, a big fraction of the customer's assets remain unavailable. The future course for this exchange will be through continuing tests on complex legal and regulatory challenges while trying to revive trading and restore lost funds for its users.
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