19 July 2024

Shocking! We wish this didn’t happen. This is possibly the biggest setback to Indian crypto ecosystem ever. We can’t predict what will happen to Indian users affected by this. But we have one message to give you – keep calm, and be patient as this plays out.

We cover what transpired and what is in store.

THE HOT TAKE

WazirX breach will change a lot of things

Post disclaimer: This post is written by the analytics team of Giottus and does not represent actual views of the company and/or the brand.

Rarely do we skip coverage on what happened in global crypto markets. Today is one such day where India’s strong crypto ecosystem has been shaken at its core.

Short recap on the breach for you –

• Around noon yesterday, multiple security firms flag suspicious transactions from WazirX’s mutisig wallet amounting to $235 million

• WazirX confirms the breach on X

• Users start to panic

• Investigations begin and WazirX posts an update later in the night regarding the nature of cyber attack calling it force majeure

Meanwhile, on-chain researchers including ZachXBT uncover what happened with the stolen assets.

The latest update being that most assets are now converted to ETH (rather than stablecoins USDT, USDC which can be blocked on-chain).

In this context, many crypto-based entrepreneurs have urged the public to remain calm and hope for the best. Here is the tweet by Vikram Subburaj, CEO, Giottus.

What happens now? There are many questions that are being floated across X (twitter), Whatsapp and other groups. We share some possibilities.

1)Will WazirX partially refund assets?

WazirX as a platform continues to run but without buy side liquidity given it has stopped all withdrawals. Naturally all assets within the platform are selling at a loss with minimal buyers.

About 50% of all customer funds have been stolen in this hack. If no recovery is possible (highly unlikely of a full recovery), users should get back some share but timeline is uncertain.

2)Will the Government intervene?

We are not sure how the Government will react. A breach of this scale has not happened in Indian crypto ecosystem before.

3)Will this affect the upcoming union budget and the likely tax implications?

The team at Giottus and others have been advocating for a rationalized tax regime and TDS deduction for crypto. The WazirX breach could set us back in this endeavour.

4)Are your crypto assets safe in other Indian exchanges?

Most Indian exchanges, including Giottus, have communicated that your funds are safe and are not affected by the WazirX breach. You are encouraged to confirm with your exchange.

5)What changes in the Indian crypto ecosystem now?

Security protocols have to be revisited and tightened across platforms in India. Exchanges have to be paranoid about user funds and their safety. We hope that no such breach happens again globally.

6)Will Indian crypto users regain the trust in our ecosystem?

We are hopeful that Indian investors continue to support the ecosystem. We are definitely with you in these troubled times and we will emerge stronger, together.

Top-3 stories of the week:

1

2

3

WEEKLY MACROS

• Total crypto market cap - $2.35 trillion - UP11.4%

• Bitcoin price - $64,154 - UP 12.5%

• The dollar index (DXY) - 104.17 - DOWN 0.3%

• Bitcoin Dominance - 55.01% - UP 1.0%

• Crypto Fear and Greed Index - 60 - Market is in Greed

Was this newsletter forwarded to you?

If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.