WazirX exchange reborn! Bidding farewell to the $230 million hacker attack incident, resuming operations this week.

The Indian crypto assets exchange WazirX will resume trading operations this week after being closed for 16 months due to a virtual money theft incident that led to a loss of $230 million. WazirX co-founder Nischal Shetty confirmed on X that trading will resume on October 24. Tokens on the platform will be restored in stages over four days and will be fully enabled by October 27.

$230 million Lazarus hacker attack timeline

In July 2024, WazirX reported that North Korea's Lazarus group exploited a vulnerability in its multi-signature wallet system, resulting in the theft of over $230 million in funds. The Lazarus group is one of the most notorious hacking organizations in the world, affiliated with the North Korean government, and specializes in targeting cryptocurrency exchanges and DeFi protocols. The organization has carried out several major attacks, including the $625 million theft from Ronin Bridge in 2022.

The multi-signature wallet system was originally regarded as one of the safest asset custody methods, requiring multiple private keys to sign simultaneously to execute transactions, thus avoiding single points of failure. However, the Lazarus Group exploited a vulnerability in the implementation of the WazirX multi-signature system, possibly by acquiring some signing permissions through social engineering attacks, or by exploiting vulnerabilities in the smart contract logic to bypass the verification mechanism.

A few days later, WazirX, the largest Crypto Assets exchange in India at the time, suspended all trading operations. This decision, while protecting the remaining assets from further attacks, also left hundreds of thousands of users' funds frozen on the platform, unable to be withdrawn or traded. This predicament is extremely common after a Crypto Assets exchange is attacked, as platforms need to make difficult choices between safeguarding asset security and meeting users' liquidity needs.

A loss of 230 million USD is catastrophic for WazirX. As India's largest crypto assets exchange, WazirX was managing hundreds of millions of USD in user assets before the attack. The loss of 230 million USD means that a significant amount of users' funds have vanished, which not only represents an economic loss but also a complete collapse of trust. Many users expressed anger and despair on social media, questioning why WazirX's security measures were so weak.

In the 16 months since the attack, the WazirX team has been working with law enforcement agencies to recover the stolen funds while seeking legal avenues to restructure the company and resume operations. This process is extremely complex, involving multiple jurisdictions (WazirX is registered in Singapore but primarily serves the Indian market), creditor negotiations, and scrutiny from regulatory authorities. A 16-month closure is an eternity for a technology company, and many users have already lost hope, believing that WazirX will never restart.

Singapore court approves restructuring with 95.7% creditor support

Last week, the Singapore High Court approved the revised restructuring plan of WazirX, which received the approval of 95.7% of participating creditors. This effectively paves the way for the platform to resume operations. A support rate of 95.7% is extremely rare, indicating that the vast majority of creditors recognize the compensation plan and restart plan proposed by WazirX.

The core content of the restructuring plan may include: a loss-sharing mechanism, where all users proportionally bear a loss of 230 million USD; tokenized debt, converting users' losses into claims on future earnings; and a staggered compensation commitment, with WazirX promising to gradually repay users' losses with future trading revenue. Although WazirX has not publicly disclosed the complete details of the restructuring plan, a support rate of 95.7% suggests that the compensation scheme is relatively fair and feasible.

The approval of the Singapore High Court is legally binding, which means that even if a minority of creditors disagree, the restructuring plan will still be enforced. This legal process protects the interests of the majority of creditors and prevents a few dissenters from obstructing the entire restructuring process. For WazirX, the court's approval is the biggest milestone, providing legal certainty and eliminating the largest regulatory hurdles.

Why are creditors willing to accept the restructuring plan? Possible reasons include: if WazirX goes directly into bankruptcy liquidation, creditors may end up with nothing or receive very little compensation; if WazirX can restart and become profitable again, creditors have the opportunity to receive more repayment in the future; and the 16-month deadlock has left creditors weary of waiting, willing to accept an imperfect but executable plan. The 95.7% support rate reflects this realistic attitude.

WazirX announced earlier on Wednesday that the platform has enabled Indian Rupee and Crypto Assets deposit functionalities, while also updating the Token balance page. This is a key preparatory step before the restart, allowing users to fund their accounts prior to trading opening, ensuring sufficient liquidity at the start. This phased restart strategy mitigates systemic risks and prevents system crashes due to a surge in trading requests at the opening.

Phased Restart and User Asset Recovery

According to WazirX's blog post, the tokens on the platform will be enabled for trading in phases over four days, with full activation by October 27th. This phased strategy is a well-thought-out risk management measure. On the first day, trading may only be open for mainstream coins such as Bitcoin and Ethereum, followed by a gradual opening of more token pairs, ultimately achieving full trading on the fourth day.

The benefits of phased activation include: system stress testing, initially opening a small number of trading pairs to test system stability; gradually establishing liquidity to avoid severe price fluctuations caused by insufficient liquidity at the opening; and allowing users to gradually adapt, giving them time to familiarize themselves with the new platform features and security measures. This cautious approach shows that the WazirX team has learned from past attacks and places greater emphasis on security and stability.

“Your support has helped us complete the impossible task of restarting this mission,” Shetty wrote in a post on X. “Now we take the next step to create more value for all those affected.” While this statement is full of gratitude, it has also raised some questions. For users who have suffered heavy losses, whether the promise to “create more value” can be fulfilled remains uncertain.

WazirX Staged Restart Schedule:

October 23: Enable Indian Rupee and encryption deposits feature, update Token balance

October 24: The first batch of mainstream coins will be open for trading.

October 25-26: Gradually open more Token trading pairs

October 27: Fully enable all Token trading functions

For users, the primary concern after a restart is how their assets will be restored. If a loss-sharing mechanism is adopted, all users' balances may be proportionally reduced. For example, if the platform's total loss accounts for 30% of users' assets, then each user may only be able to retrieve 70% of their original assets. Although this plan is fair, it still represents a significant loss for heavy users.

Another key issue is the new security measures. WazirX must prove to the market that it has learned from the attacks and upgraded its security infrastructure. This may include: redesigning the multi-signature wallet system, introducing a cold-hot wallet separation mechanism, deploying real-time monitoring and abnormal transaction alert systems, and purchasing insurance to cover potential future losses. Only when these measures are in place and transparently communicated can users begin to trust WazirX again.

The Road to Rebuilding Confidence in India's Crypto Market

As the largest crypto assets exchange in India, WazirX's attack and long-term closure have had a profound impact on the entire Indian crypto market. Many users have turned to international exchanges or completely exited the crypto market as a result. The relaunch of WazirX is not only a revival of a company but also a test of confidence for the Indian crypto community.

India's cryptocurrency regulatory environment has been fraught with challenges. The government imposes a 30% capital gains tax and a 1% transaction tax (TDS) on cryptocurrencies, and this stringent tax policy has stifled market vitality. The attack on WazirX further undermined market confidence. If WazirX can successfully restart and resume operations, it will demonstrate the resilience and maturity of the Indian crypto market.

However, restarting does not mean everything goes back to square one. WazirX needs to regain user trust, which may take years. Many users may choose to keep only the minimum necessary funds on the platform, while large assets remain stored in cold wallets or international exchanges. The speed of recovery in trading volume, the growth rate of new users, and whether the platform can launch innovative products to attract users back will all determine WazirX's long-term prospects.

For the entire encryption industry, the WazirX case once again emphasizes the extreme importance of security. No matter how innovative the technology is or how large the market share, a successful attack can destroy everything. Exchanges must view security investment as a necessity for survival, not an optional cost. Users should also understand the basic principle of “not your private key, not your coin” and minimize the funds stored on the exchange.