The $230-million WazirX hack: regulatory gap leaves 4 million Indians stranded

livemint.com:

₹1.4 lakh in WazirX around 3-4 years ago, which grew to ₹2 lakh over time… I think about half my money will come back—whether in 1 year or 10 years I don’t know," said Ravi Handa, a Jaipur-based investor. WazirX declined to comment for this report. WazirX, which held about $570 million in customer balances before the hackers struck, cancelled trades done after 18 July and stopped withdrawals.

It thereafter allowed withdrawal of two-thirds of the cash balances held with the exchange in a phased manner. It decided to retain the remaining one-third of the balances to meet legal requirements. This amount may relate to past seizures by enforcement agencies of cryptocurrency held in trust in WazirX or to regulatory action against the exchange itself.

In 2022, the Enforcement Directorate had served a notice under the Foreign Exchange Management Act to WazirX for allowing outward remittance of ₹2,790 crore to unknown wallets. Nitin Sethi, who has been using WazirX for more than six years, shared his concerns about the platform’s governance and security issues. “It is strange that you hold so much money in one single wallet which got hacked," he said, adding that WazirX’s centralised approach instead of maintaining multiple wallets to distribute risk has put millions of users’ funds at risk.

WazirX has stated that its safeguards require 5-6 signatories, including a custodian, for its wallets. Also read | The $230 million WazirX hack: How safe are your cryptocurrencies WazirX’s Singapore headquarters has also left many users feeling abandoned by both the platform and local regulatory bodies such as India’s Financial Intelligence Unit (FIU), which is yet to issue any clear statements or actions in response to the hacking. “Indian