Cryptocurrency exchange WazirX, in a strategic move to recover user funds lost in a massive cyber attack, is set to launch a decentralized exchange (DEX) along with a revamped version of its platform. This initiative aims to help reimburse users affected by a Rs 2,000 crore security breach that occurred over three months ago.

As part of its recovery plan, WazirX will introduce “recovery tokens” for affected users, allowing them to regain 48% of their initially lost funds. These tokens, distributed proportionally, can be traded between users, potentially allowing holders to sell them while waiting for full asset recovery. WazirX expects to resume full trading on its platform by February next year.

How will decentralized exchange help customers?

The decentralized exchange, now in its early stages of development, will empower users by placing control over assets entirely in their hands, eliminating the need for intermediaries and reducing the risk of counterparty vulnerabilities. Recovery token holders will also have the option to exchange these tokens for DEX-specific tokens once the decentralized platform is activated. The company plans to launch a trial version of the DEX in the coming months, with profits from both the DEX and WazirX being funneled back to affected users.

WazirX CEO Nischal Shetty highlighted the growing demand for self-custody solutions as a result of numerous security breaches in centralized exchanges. Shetty said that only 13-15% of global cryptocurrency trading volumes come from decentralized exchanges, which serve a small portion of crypto users, underscoring WazirX’s goal of simplifying access to the DEX for the average trader.

More new features in Pipeline

Alongside the DEX, the relaunch of WazirX will include new features such as crypto staking, an over-the-counter (OTC) desk and futures trading options, all aimed at boosting revenue to support the repayment plan.

Recovery underway but loss expected

These recovery efforts coincide with an ongoing court-approved restructuring process in Singapore, where WazirX was granted a four-month moratorium. According to advisers, despite the planned recovery measures, users may face a substantial financial loss of around 850 million lei, as the total refund is unlikely to exceed 57%.

Legal challenges

WazirX is also facing legal challenges from several stakeholders, including cases filed in the National Company Law Tribunal and the Delhi High Court. A coalition of more than 30 affected users is expected to file a joint complaint with the National Consumer Disputes Resolution Commission, reflecting the widespread consequences of the security breach.

Disclaimer: Crypto products and NFTs are unregulated and can be very risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read the offering documents carefully, together with relevant literature on the subject, before making any investment. Cryptocurrency market predictions are speculative and any investment made will be at the sole cost and risk of the readers.