Sumit Gupta, CEO of CoinDCX, has sharply criticized WazirX’s proposed compensation plan for users affected by a significant hack earlier this month. Gupta’s comments underscore growing discontent within the crypto community regarding the handling of the WazirX hack and its aftermath.

CoinDCX CEO Slams WazirX Hack Compensation Plan

Gupta’s remarks came in response to a poll released by the compromised Indian exchange. The poll offers two options for users seeking to regain access to their funds following the attack. The hack, which saw the theft of 45% of user assets, has placed WazirX in the spotlight, and the exchange’s response has been met with significant backlash.

Gupta’s criticism revolves around the inadequacy of the crypto exchange‘s response. He argues that the exchange’s handling of the situation prioritizes business interests over customer welfare. “Hate to be saying this, but the way WazirX is handling this entire situation isn’t community-first,” Gupta stated.

In addition, he emphasized that losses should be absorbed by the company and its assets, not directly passed on to customers. Moreover, he labeled the compensation plan as “utter nonsense.” The CoinDCX CEO said:

“I have not seen any such commitment around this from the company side, instead making customers directly absorb the 45% losses is utter nonsense. The poll options are also framed in a manner to protect the business first and not the customers.”

On the flip side, Gupta expressed confidence in a reconsideration by the compromised exchange’s team. He stated, “Hopefully they will reconsider their approach and do what’s right by the customers.” However, several issues, including crypto tax implications of forced token conversions remain uncertain as of yet.

Also Read: WazirX Poll Explained: Impact On Users, Tax Implications, Withdrawal Limits

WazirX Hack Poll Options

The compensation poll, updated every 15 minutes, presents users with two choices:

1. Access 55% of Funds Without Withdrawals: This option allows users to access 55% of their portfolio but does not permit immediate withdrawals. Instead, the remaining 45% will be converted into Tether (USDT) or other available tokens. These users will retain priority for any potential recovery proceeds.

2. Access 55% of Funds With Withdrawals: This choice permits users to access and withdraw 55% of their portfolio, with the remaining funds also converted into USDT or other tokens. However, users choosing this option will have second priority for any potential recovery proceeds.

Issues With The Proposed Compensation

The snapshot for valuing user portfolios was taken on July 21, three days after the WazirX hack, which critics argue is unfair. In addition, the Indian exchange continued to allow deposits and trading even after halting withdrawals on July 18. This led to illegal trading and significant losses due to panic selling. The timing of the snapshot is seen by many as a way to downplay the extent of the losses users experienced.

The exchange will offer a basket of tokens equivalent in value to the stolen assets to users. It will be based on average prices from CoinMarketCap and select global exchanges as of July 21, 2024, at 8:30 p.m. IST. While this replacement aims to address the value of stolen tokens, it does not resolve issues related to the snapshot date.

Furthermore, the conversion of stolen tokens into a balanced crypto basket will incur a 1% Tax Deducted at Source (TDS). Additionally, users may face a 30% capital gains tax on any appreciated tokens that were replaced. This may add to the financial burden on users who are already dealing with significant losses if the exchange refuses to take responsibility.

Moreover, the exchange has announced plans to set daily withdrawal limits on the 55% of funds users can access. This restriction further hampers users’ financial flexibility. The WazirX hack poll deadline is set for August 3, 2024, and further updates may be provided then.

Also Read: BlackRock Confronts Crypto Scams After Ethereum ETF Launch, What’s Happening?

The post CoinDCX CEO Says WazirX Hack Compensation Plan Is “Utter Nonsense” appeared first on CoinGape.

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Filed under: News - @ July 29, 2024 11:18 am