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WazirX announced plans to launch a decentralized exchange (DEX) as part of a broader effort to enhance user security.
The move follows a major breach in July, when hackers siphoned $235 million from the platform, sparking concerns over the security of centralized exchanges.
WazirX co-founder Nischal Shetty said the new DEX would operate alongside the existing centralized platform, offering users full control over their assets.
Shetty said during the firm’s fourth townhall:
“With a decentralized exchange, assets remain fully in users’ control, free from counter-party risks.”
He added that the DEX would feature its own token, designed to cover transaction fees and provide a mechanism for community governance. It is scheduled to roll out in early 2025 with a phased approach to onboarding users.
Lazarus hack
The July 2024 hack, attributed to the Lazarus Group, exploited a vulnerability in WazirX’s multi-signature wallet. The attackers funneled stolen funds through Tornado Cash, a privacy tool that conceals transaction histories, creating challenges for investigators.
The breach, which impacted hundreds of thousands of users, was one of the largest in India’s crypto history. In response, WazirX implemented an emergency recovery plan, freezing 45% of users’ account balances by converting them into USDT and allowing only the remaining 55% to be used for trading.
However, the move faced swift backlash from the crypto community and WazirX’s own users, who accused the exchange of forcing losses onto its customers. The response highlighted a growing dissatisfaction with centralized exchanges, as users criticized the exchange’s handling of the situation as “socializing losses.”
To mitigate further fallout, WazirX reversed its initial plan in August, restoring all account balances to their pre-hack levels and nullifying trades made after the incident. The exchange said the reversal was an attempt to create a fair outcome for all users affected by the incident.
Recovery efforts
Efforts to recover the stolen funds have been fraught with challenges, as WazirX and its former custody partner, Liminal, engaged in a public dispute over accountability.
Each party blamed the other for the breach, with WazirX asserting that Liminal failed to uphold security standards and Liminal countering that the exchange’s management practices contributed to the security failure.
The unresolved dispute has left customers in limbo as both companies navigate the aftermath. The plan to launch a DEX represents WazirX’s attempt to regain trust by embracing decentralization as a long-term solution to security risks.
Industry experts believe the shift could signal a broader trend among exchanges to prioritize decentralized models, especially as users grow increasingly cautious about the security of centralized platforms.