WazirX Ditches ‘Socialized Loss’ Strategy After Community Uproar

WazirX is back to the drawing board after failing to sell its controversial “socialized loss” strategy to the crypto community.

• WazirX’s “socialized loss” strategy has received massive user pushback.
• Users concluded a poll to give feedback on the strategy on August 3.
• The exchange has reportedly abandoned the controversial plan.

Indian crypto exchange WazirX is back to the drawing board after its attempt to reopen trading operations with 55% of user funds faced massive pushback on X (formerly Twitter).  

The hacked trading platform floated a controversial “socialized loss” strategy on July 27, which sought to distribute the $234 million loss incurred equally among users. A poll to vote on the strategy opened on the same day and closed on August 3.

1. This poll is a preliminary step to understand your opinions.
2. This poll is not legally binding upon the users or WazirX
3. We will soon launch feedback form to collect more ideas
4. We are now looking into next steps based on all the feedback received

This is a major… https://t.co/tcdDjWzIYI

— Nischal (Shardeum) 🔼 (@NischalShetty) July 29, 2024

Users Force WazirX to Abandon the Strategy

Two days into the poll, the WazirX team encountered user uproar on X, forcing the exchange’s founder and CEO, Nischal Shetty, to clarify that the exercise was a preliminary step to understanding user opinion and that it was not legally binding.

However, this didn’t seem to cool down the already-irked users, with one asking the exchange to contribute all its profits over the past years to the recovery fund.

“Whatever options am seeing so far by your team doesn’t include WazirX’s balance sheet.” The user wrote. 

“Currently, it feels like WazirX is acting like a 3rd party trying to resolve the hack issue among users themselves.”

Another user urged WazirX to take full ownership of the incident and file for bankruptcy. Per the user, the exchange should liquidate “whatever assets” it has to repay affected customers and exit the crypto scene.  

Amid the ongoing backlash, Moneycontrol reported on August 4 that WazirX had abandoned the controversial loss-sharing strategy.

“The plan wasn’t final. So, to restart operations, the exchange had to chart a forward path and reached out for the community’s feedback. After the blowback, WazirX decided to go slow on it.” The report quoted an anonymous source.

In his previous update, Shetty said WazirX would launch feedback forms to collect more ideas as it explored “next steps” based on the opinions gathered in the recent poll.