CoinSwitch to help WazirX hack victims with $70 million recovery initiative

CoinSwitch is looking to acquire a share of WazirX customers via a recovery fund that aims to distribute up to $70 million to users affected by the $230 million hack of the exchange.

On January 7, the crypto exchange unveiled the CoinSwitch Cares fund, labeling it as a recovery fund that would eventually distribute INR 600 crores ($69.9 million) over two years.

While this program doesn’t directly offer any financial assistance, it helps with the recovery process by offering incentives such as sign-up bonuses, revenue-sharing opportunities, and referral rewards.

According to the official announcement, eligible users, those who are able to provide proof of their losses through WazirX loss statements and other documentation, will be able to participate in the program, which is being financed entirely from CoinSwitch's cash reserves.

Upon signing up for CoinSwitch Cares, users will need to upload their verified WazirX loss statements via the dedicated CoinSwitch Cares portal.

Once their claims are verified, users will gain access to sign-up bonuses, capped at INR 15,000 per user over two years, along with referral rewards limited to INR 10,000 per user.

Users will also be eligible for Revenue Redistribution, where CoinSwitch will pool trading revenue generated from user activity within the program and redistribute it proportionally based on the verified losses of each participant.

Rewards will be credited to enrolled users’ CoinSwitch accounts in either INR or crypto.

While sign-up and referral rewards will begin accruing immediately, they will only be credited starting February 7, 2025.

Meanwhile, revenue distribution will start once WazirX enables withdrawals.

The recovery program plans to appeal to the roughly four million users affected by the WazirX hack, giving them a chance to “recover losses, earn rewards, and confidently re-enter the market,” the announcement said.

CoinSwitch estimates a recovery rate of up to 100% based on current market values as of January 7, 2025. 

However, it's important to note that currently, the exchange only offers the option to withdraw funds in INR, as direct crypto withdrawals are not supported under the program.

Additionally, rewards will accrue and remain valid only as long as the deposited funds stay within the CoinSwitch ecosystem.

Crypto community divided

Community reaction to the recovery fund has been mixed, with some users lauding the effort to help victims while others calling it a marketing gimmick. 

Justice for WazirX, an X account dedicated to seeking justice for affected WazirX users, called the initiative a "shameless cash grab" rather than an actual recovery effort. 

Meanwhile, Wise Advice, a crypto commentary platform, praised the exchange’s efforts and urged other local exchanges to consider similar initiatives to help the community.

The WazirX hack

Once the largest Indian cryptocurrency exchange, WazirX lost over $230 million in user funds after an attacker managed to exploit one of the exchange’s hot wallets.

The lost funds amounted to roughly 45% of WazirX’s total customer funds, and as such, the exchange had to halt operations.

Since then, the exchange has been working on restructuring efforts under a Scheme of Arrangement in Singapore, while user funds have remained stuck with the platform.