WazirX to Launch Decentralized Exchange After $235 Million Hack

• WazirX launches DEX to boost user security after a $235M hack, addressing centralized exchange concerns.
• July hack prompts WazirX to restore user funds, responding to backlash over socializing losses with clients.
• WazirX’s new DEX reflects a shift in crypto toward decentralization as users seek more control and security.

WazirX has announced plans to launch a decentralized exchange (DEX) in response to a significant breach in July that resulted in a $235 million loss. The launch aims to boost user security and control, addressing concerns surrounding centralized exchanges.

The decentralized exchange will run alongside the centralized platform, resulting in the complete custody of users’ assets. WazirX’s co-founder Nischal Shetty spoke up about the advantages of decentralization during WazirX’s recent town hall. 

This model allows users to avoid counterparty risks that are a problem on centralized exchanges. In early 2025, the exchange will be introducing a native token that will be used to process fees and provide governance in the DEX.

Security Breach and Immediate Response

The July hack, attributed to the Lazarus Group, exploited a flaw in WazirX’s multi-signature wallet, allowing attackers to siphon funds. They moved the stolen assets through Tornado Cash making recovery efforts more challenging. In response, WazirX initially froze 45% of user accounts and converted funds into USDT, permitting limited trading with the remaining balances.

This decision sparked backlash among users and the broader crypto community, as many criticized the forced conversion and limited access to their assets. In addition, users expressed frustration over what they described as “socializing losses” onto customers, reflecting a growing discontent with centralized exchanges.

Restoration of User Accounts

To address user dissatisfaction, WazirX reversed its initial decision in August, restoring all user account balances to pre-hack levels. The reversal aimed to provide a fair outcome for affected users and to rebuild trust in the platform. However, the exchange’s response has left many users questioning the stability of centralized exchanges, as trust remains fragile.

Read CRYPTONEWSLAND on google news

Recovery Efforts and Ongoing Dispute

Efforts to recover the stolen funds have faced obstacles. Moreover, WazirX and its former custody partner, Liminal, have engaged in a public disagreement over responsibility for the breach. Each party claims the other’s failures contributed to the vulnerability, leaving customers in uncertainty.

The launch of WazirX’s DEX could mark a shift in the crypto industry as exchanges momentum to decentralized architecture for increased security. This could potentially be aligned to an overall growing trend among users towards decentralization for fear of centralized platforms.