Socialize the loss after a hacking incident - will you do it?

[avikz]

As you guys already know about the hacking incident happened in Wazirx. A whooping sum of 234 million USD was stolen by the hackers which rightfully belongs to the users of Wazirx under the supervision of the exchange.

It sparked a huge amount of controversy amongst the users which forced Wazirx to move out of this plan. But such kind of tactics are not well appreciated.

https://www.cnbctv18.com/market/cryptocurrency/wazirx-socialise-loss-security-breach-among-all-customers-cyberattack-crypto-not-stolen-tokens-19454088.htm

Would like to know your thoughts. Do you think it's fair and will you be willing to share the loss?

[Davidvictorson]

They deserved the backlash and if I were one of their customers, I would be the loudest. Their plan was so stupid that is shows how clueless the leadership of the organization are. It is a sign of poor leadership - wanting to make others take responsibility for your mistake instead of owning it and seeking solutions to it. If I were any of the customers, I would move out all my assets held in the exchange out. They do not deserve my loyalty as they can throw customer under the bus for their failures.

[Myleschetty]

Would like to know your thoughts. Do you think it's fair and will you be willing to share the loss?

First, this is why every cryptocurrency enthusiast is advised not to use an exchange as storage.
Second, Wazirx and their team introducing the socialized loss strategy shows they are incompetent and aren't worth the trust of every crypto trader in the future because if they can't socialize the profit they are making all these years why would they socialize a loss?
it doesn't make any sense and they should be charged to court for this and be held accountable for the hack incident.

[avikz]

They deserved the backlash and if I were one of their customers, I would be the loudest. Their plan was so stupid that is shows how clueless the leadership of the organization are. It is a sign of poor leadership - wanting to make others take responsibility for your mistake instead of owning it and seeking solutions to it. If I were any of the customers, I would move out all my assets held in the exchange out. They do not deserve my loyalty as they can throw customer under the bus for their failures.

First, this is why every cryptocurrency enthusiast is advised not to use an exchange as storage.
Second, Wazirx and their team introducing the socialized loss strategy shows they are incompetent and aren't worth the trust of every crypto trader in the future because if they can't socialize the profit they are making all these years why would they socialize a loss?
it doesn't make any sense and they should be charged to court for this and be held accountable for the hack incident.

Cannot disagree! Asking users to share their loss is an example of bad leadership and shows that they are clueless on how to resolve this issue. Thankfully now they are moving to somewhat right direction. Such kind of incidents are really a bummer in the growing adoption of cryptocurrencies.

The saddest part is that, law enforcement agencies can't do a shit about this hacking incident. If it was a bank hacking, the money would have been recovered by now, at least the most of it.

[Poker Player]

I agree with the general line of the responses:

...Wazirx and their team introducing the socialized loss strategy shows they are incompetent and aren't worth the trust of every crypto trader in the future because if they can't socialize the profit they are making all these years why would they socialize a loss?
it doesn't make any sense and they should be charged to court for this and be held accountable for the hack incident.

Their plan was so stupid that is shows how clueless the leadership of the organization are..

Asking users to share their loss is an example of bad leadership and shows that they are clueless on how to resolve this issue.

Just raising the socialization of losses alone is like to pull all the money out of there as soon as it becomes available.

I hope they come up with some other satisfactory solution, since as the article says they are studying all possible options, such as mergers and acquisitions, since some company may be interested in entering the business despite the loss of the customer base.

The problem is that if they do not reach that solution, the socialization of losses sometimes occurs in a forced way, if they declare bankruptcy when their liabilities exceed their assets by far and they have many people wanting to withdraw, but they should not propose it as a normal way of doing business after de hack.

[YOSHIE]

Would like to know your thoughts. Do you think it's fair and will you be willing to share the loss?

If this method is used, the socialization plan will certainly get a strong reaction from users.

A socialised loss strategy is a method where the losses are shared among all users in a fair and equitable way. Instead of a single individual bearing the entire burden of the loss, the impact is spread out to minimise the financial strain on just one person.

By law they should have to compensate all WazirX users' assets, not the other way around, they want to do 55/45%, of course this method will be burdensome for crypto users, It seems a bit like they don't want to take responsibility themselves, instead having to involve the victims in the losses.

If such socialization was planned by WazirX, I think on the contrary, wanting to gain the trust of users, instead the negative response they got, 45% is a large amount of money, which is just lost.


However, I'm sure the socialization method has its pros and cons, some users have to return 100% of their funds and others 55%, no problem, rather than not getting it at all, this is a problem for WazirX, my understanding.

[Fiatless]

Would like to know your thoughts. Do you think it's fair and will you be willing to share the loss?

The repayment plan will depend on the terms and conditions of the exchange. Socialising the loss should have been the last option if others failed. It is good to know that they are seeking other means to overcome this problem which going into mergers or selling some stake in the business. This is not a fair means of sorting out such issues, after all the company doesn't share profits with its customers. If WazirX still wants to be in business, it should devise a better repayment plan for its customers. I will not be willing to share the loss but will gladly accept it if it is the only option available.  

[zasad@]

I heard stories like this even more than a year ago that recovering stolen coins has become a good business. For a long time now there have been law firms that negotiate with hackers and the victim does not have to file a police report. And here comes the hope that the company will voluntarily give 15% of the stolen coins as a bug bounty and continue working.

And stock exchange users have always been in the last place of interest in such cases. Mt Gox users started receiving stolen money after 14 years

[Z-tight]

Would like to know your thoughts. Do you think it's fair and will you be willing to share the loss?

No, i wouldn't be willing to do that, socializing the losses by locking 45% of all their customers funds does not make sense to me, and that is why the entire industry was shocked when WazirX came up with such a plan. The exchange has to do better with their security, even though i would never store my funds in an exchange, even if they claim to be secure and are reputable, not your keys, not your coins. One thing is certain in all of this, it would take a very long time for creditors to get their money back.

[yhiaali3]

This is a very bad way to run a business, if these companies are not able to take responsibility for their customers why do they continue to operate?

Why should users bear the failure of WazirX, I expect most users will not want this wrong decision but they are forced because it is a centralized platform and they do not actually own their coins, this is the biggest disadvantage of centralized platforms.

But not all centralized platforms are the same, I remember when there was a hack on some platforms that respect their customers such as Binance and Kucoin, they compensated all their users without losing a single cent.

[zasad@]

This is a very bad way to run a business, if these companies are not able to take responsibility for their customers why do they continue to operate?

Why should users bear the failure of WazirX, I expect most users will not want this wrong decision but they are forced because it is a centralized platform and they do not actually own their coins, this is the biggest disadvantage of centralized platforms.

But not all centralized platforms are the same, I remember when there was a hack on some platforms that respect their customers such as Binance and Kucoin, they compensated all their users without losing a single cent.

should or shouldn't is a legal question.

Any exchange can quickly close down like Hotbit and nobody gets anything. I had $50 there
It was a great exchange without KYC, but I didn't store any coins there, so I lost $50.

Crypto Exchange Hotbit Shuts Down 9 Months After Criminal Probe
https://blockworks.co/news/hotbit-crypto-exchange-shuts-down

[yhiaali3]

should or shouldn't is a legal question.

Any exchange can quickly close down like Hotbit and nobody gets anything. I had $50 there
It was a great exchange without KYC, but I didn't store any coins there, so I lost $50.

Yes, unfortunately, this is the reality, any exchange can close down immediately and users get nothing and this has already happened without users being able to do anything.

Also, bankruptcy law can protect companies if they declare bankruptcy officially, as they get legal protection and can only be compensated for a small amount of their remaining assets. Also, some users prefer to give up their assets to maintain their privacy and instead of getting into the labyrinth of bureaucratic complications and proving their identity.

In the case of WazirX, although this is unacceptable to many users, in the end, getting a little is better than nothing.

[Z-tight]

Any exchange can quickly close down like Hotbit and nobody gets anything. I had $50 there
It was a great exchange without KYC, but I didn't store any coins there, so I lost $50.

An exchange cannot just shut down and take people's money along with them, you probably lost $50 because you didn't withdraw your money before the deadline that was posted by the exchange. Hotbit directed that customers should withdraw their money before 21/06/2023, so i guess any customer who didn't withdraw their funds before that time lost their money. They stopped operations on May 22, 2023, so they gave about a months notice for people to withdraw their funds.

[avikz]

In the case of WazirX, although this is unacceptable to many users, in the end, getting a little is better than nothing.

It's because WazirX didn't file for bankruptcy at all. They have files for moratorium so that they can get time as well as pull in some investments to cover for the losses. While the socialized losses was not a good idea to me, it's comforting to know that they are not planning to close down the operations and run away. They are taking every possible measures so that they can return to their business and normalize everything for their users and for themselves. That's alone is a good gesture by the company.

I know a lot of exchanges were closed down after such hacking incidents and also some exchanges were able to come out of it stronger. Hopefully WazirX will be able to come back stronger.

[hugeblack]

Any decision after a hack has occurred must be careful and precise and inform users that there is no problem because the slightest rumor will lead to withdrawal of reserves or hinder any new deposits, which means that if a million dollars are hacked, any subsequent rumor could cause the loss of billions of dollars.

[zasad@]

Any exchange can quickly close down like Hotbit and nobody gets anything. I had $50 there
It was a great exchange without KYC, but I didn't store any coins there, so I lost $50.

An exchange cannot just shut down and take people's money along with them, you probably lost $50 because you didn't withdraw your money before the deadline that was posted by the exchange. Hotbit directed that customers should withdraw their money before 21/06/2023, so i guess any customer who didn't withdraw their funds before that time lost their money. They stopped operations on May 22, 2023, so they gave about a months notice for people to withdraw their funds.

Did you make any withdrawals?
I remember that there were news about withdrawal, but either the site didn't work or withdrawals didn't work and you had to contact technical support.
I did not spend a lot of effort for such a small thing.

[Z-tight]

Did you make any withdrawals?
I remember that there were news about withdrawal, but either the site didn't work or withdrawals didn't work and you had to contact technical support.

I was never a user of that exchange, so there was no way i could have made any withdrawal. I also didn't read any news about their withdrawals not working as of that time, maybe i would check the internet to see if i would find anything. However, it is also common for exchanges to 'complicate' things regarding withdrawals when they are about to shut down or about to return customers stolen funds, so what you said could very well have happened.

I did not spend a lot of effort for such a small thing.

I totally get it.

[Lucius]

The very attempt of the company to compensate the loss in this way only shows what kind of mindset they have. If they were already unable to protect their clients' funds, then let them at least try to solve it in the right way - although I see this situation in a way that the company actually wants to say "you were "stupid" enough to trust us with your money, now take the blame for what you trusted us".

A business should have clear rules and not act like a charity.