- The WazirX survey, which was released on July 27, might have significant repercussions for its users, who have already experienced losses as a result of the exchange losing 45% of user cash following the attack on July 18.
After a big hack, customers have two alternatives to partially restore access to their cash, according to the most recent WazirX poll. These alternatives, their effects on users, the tax ramifications, and withdrawal limitations are all explained in this paper. Furthermore, the meaning behind the crucial August 3 deadline has been revealed.
Options for the WazirX Poll
1. Get Access to 55% of Your Funds Without Withdrawals, with Prospective Recovery Proceeds Receiving First Priority:
- With this option, consumers can access fifty-five percent of their portfolio without having the power to take instant cash out. The remaining 45% would be exchanged for other tokens offered by the Indian exchange or Tether (USDT).
- Because of this, customers that select this option will be given preference when it comes to sharing possible recovery proceeds.
2. You can withdraw up to 55% of your funds, with any recovery proceeds taking precedence over other funds.
- Users can access and withdraw up to 55% of their assets with this option. Here too, the token conversion is applicable.
- Users that want to do this will therefore be given second priority for any potential recovery funds.
WazirX will use the poll results, which are updated every 15 minutes, to inform its choice. The results of the poll, continuing inquiries, platform liquidity, and changing conditions will all be taken into account by the exchange. The second option is now preferred by most consumers because they want quick withdrawals.
What Effect Will It Have On Users?
Because of the breach and the ensuing poll options, users encounter a number of difficulties.
1. The Snapshot Date Debate:
- Three days after the incident, on July 21, is the snapshot that will be used to value user portfolios. Opponents contend that this is unjust because WazirX stopped accepting withdrawals on July 18 but kept accepting deposits and trading.
- Due to the loss of 45% of user cash, WazirX did not have the token backing for these transactions, which made trading “illegal.” Furthermore, panic selling caused prices to crash as consumers sold their cryptocurrency for Indian rupees after realizing that the fiat reserve remained unchanged. However, more losses resulted from the panic.
2. Replacing Misplaced Tokens:
As of July 21, 2024, at 8:30 p.m. IST, users will get a basket of tokens equal in value to the stolen tokens, based on average values from CoinMarketCap and a few international exchanges.
The snapshot date problem is not addressed by this solution, but it does guarantee that users can retrieve the value of their stolen tokens.
WazirX Survey Brings Up Tax Issues
1. Induced Conversion of Tokens:
Tokens that have been stolen must be replaced by a well-balanced cryptocurrency basket. This cryptocurrency asset transfer is subject to a 1% TDS (Tax Deducted at Source) in India.
It’s unknown who is responsible for carrying this TDS. The financial strain on consumers will increase because of this, as they already experience large losses and limited access to their money.
2. Tax on Capital Gains:
In the event that users’ valuable tokens—like Shiba Inu (SHIB)—are stolen, their replacement with an alternative token may be deemed a sale.
A capital gains tax of 30% on the earnings may result from this. Furthermore, because users have already suffered from the attack and the locking of 45% of their cash, this is unfair.
Limits on Exchange Withdrawals
WazirX intends to impose daily withdrawal caps on the 55% of available cash for users. It follows that users are unable to quickly remove even the unlocked fraction of their assets. As a result, it further limits their freedom with money.
July 3 Deadline’s Significance
- User responses to the poll must be submitted by August 3, 2024, at 7:00 a.m. IST. This day is significant since it is the last chance for consumers to express their preferences for the course of action.
- This date is crucial for determining how the recovery process and future operations will unfold, as the exchange will restart platform operations soon following the poll.
In summary
Users are faced with difficult decisions in the WazirX poll, each of which has important ramifications. Users’ challenges are further compounded by the snapshot date, tax obligations, and withdrawal limitations. Therefore, the August 3 deadline is essential for deciding what to do next and making sure that users’ opinions are heard. The cryptocurrency exchange must therefore weigh operational stability against a just recovery while taking lessons from other exchanges’ past mistakes.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
