Inside WazirX’s comeback and long road to redemption

Crypto exchange WazirX has restarted operations one-and-a-half years after losing $234.9 million in a catastrophic crypto heist, making it a rare survivor in an industry where exchange collapses are usually permanent and comebacks rare. 

While the Mumbai-based platform has managed to navigate a lengthy arbitration process and bring trading back online, its ability to rebuild trust and sustain operations remains uncertain in a market that keeps testing the resilience of players.

The crypto trading space is littered with the remains of exchanges that once handled millions of dollars every day. Many of them had suffered security breaches that triggered cascading financial troubles.

For instance, Mt. Gox lost 850,000 Bitcoin in 2014. Then there is QuadrigaCX, whose founder's death left $190 million inaccessible. FTX collapsed spectacularly in 2022, while Cryptopia was hacked in 2019 and robbed of millions. And none of these have come back online.

“We are probably the only exchange that has been able to get back on our feet again,” says Nishchal Shetty, CEO of WazirX, in an interview to YourStory. 

“Fifteen months might seem long, but in exchange time, it’s the fastest comeback you’ll see.”

Since its inception, WazirX has fought and survived several uphill battles. It has navigated prohibitive taxes, regulatory uncertainty, investigations by the Enforcement Directorate, and even a murky ‘acquisition’ saga involving crypto giant Binance. 

While trading activity has now returned to the exchange against all odds, its challenges are far from over.

Rocky road to recovery

Traders were able to recover some funds after WazirX implemented a ‘socialised loss recovery’ scheme, in which a portion of assets from unaffected traders was used to offset the losses suffered by those hit by the heist.

The scheme itself took more than a year to receive clearance from an arbitration court in Singapore, where WazirX’s parent company is registered.

“The process was exhausting,” Shetty recalls. “There were votes on votes on how to go about returning money to people. But in the end, more than 95% of our users, including the largest holders, voted for the socialised loss scheme.”

Just as WazirX began to find its footing, a new challenge emerged. The Madras High Court recently ruled in favour of a WazirX investor who had objected to her assets being used to offset others’ losses.

Shetty says it is an individual case only amounting to assets worth Rs 9 lakh held as XRP, a business focused cryptocurrency, and will be dealt with accordingly in a separate arbitration process.

“It’s an interim matter that will now move to arbitration. The outcome will apply only to that individual... It doesn’t affect our scheme in any way,” he says.

He adds that the restructuring plan has already been sanctioned by the Singapore court and is binding on all customers who hold crypto on the platform.

“Distribution under that plan has been completed. Everyone has received funds as per the Singapore-approved restructuring. Operations, including trading and withdrawals, continue as usual. As for court cases, we’ll address them as they come and do what’s legally right.” 

However, legal experts say the court ruling could open the door for similar petitions if other users challenge the redistribution of XRP tokens. That could potentially drag WazirX into another long arbitration—precisely what the company and a lot of its users had sought to avoid when they voted against full liquidation.

Shetty says, “We knew liquidation could take a decade. We wanted people to get their money back now, not in 2035.”

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Getting back to the core 

After a crippling hack that erased nearly half the exchange’s assets, Shetty had the perfect excuse for a distress sale—and maybe even the time needed to focus on a new project while lawyers and accountants picked over the remains.

Instead, he remains steadfastly in charge for now, trying to piece the platform back together and restore credibility in a market that may have moved on. Although the company had explored a possible merger and partnerships with other crpto exchanges, Shetty says none of the conversations materialised.

“After something like this, you can’t expect customers to just trust you right away. They need to see how you operate, how secure things are, how you handle withdrawals and trading. Trust has to be earned back, not assumed,” he says.

When a crisis shreds user confidence, most platforms may be tempted to woo back customers with incentives and aggressive retention schemes. But Shetty is doing the opposite—letting customers decide what they want.

“We’re not setting a retention target,” he says. “Because the moment you do that, you start making it hard for people to leave. We just want every customer to be able to do what they want—trade, sell, withdraw, or exit completely.”

This hands-off approach has helped stabilise prices and sentiments faster than expected. The anticipated exodus hasn’t happened; some users are even bringing funds back in.

Fees on the WazirX platform have been temporarily set to zero, withdrawals are unrestricted, and communication is focused on calming users, not cajoling them.

“We told everyone not to panic sell. Withdrawals will be open. Take your time,” says Shetty.

Majority of WazirX’s assets are now held with BitGo, one of the world’s largest crypto custodians, which also offers insurance coverage of up to $250 million. 

The focus now, Shetty insists, is to “get back to the core”—giving the users a solid trading experience and regaining their trust.

The early signs appear positive, and WazirX will have to make them count.

Five days since its relaunch, volumes are climbing—around 50 bitcoins (BTC) are being traded daily on the platform, compared to barely half a BTC when the exchange first launched in 2018.

It’s still a shadow of its former self, but it’s not starting from zero. “We have a user base that hasn’t abandoned us,” says Shetty. “That’s something to build on.”

The core team at WazirZ—comprising around 80 people—has largely stayed intact through all the troubles. They are now moving from managing the restructuring to focusing on new features and products. 

Meanwhile, WazirX’s rivals, including CoinDCX and Coinswitch, have moved on to in-demand lucrative derivatives trading for crypto. WazirX does not do this.

The exchange has carved out a three-year financial runway from the funds remaining after the hack. These reserves will keep operations alive, fund efforts to recover stolen assets, and possibly allow future profit-sharing with users.

However, there’s no rush to raise external capital. “The priority is to stabilise, serve existing users, and rebuild organically,” says Shetty. “Once that’s done, we can think about growth capital.”

The next three years will be a litmus test for the crypto exchange. Can it resurrect itself in a country where regulation around crypto currency is still catching up and user sentiment is fragile?

For Shetty, there is no fallback option. WazirX isn’t one of several ventures he can move on from; it’s the only project that matters to him. 

“There isn’t a Plan B,” he says. “This is what we’ve built for years, and it’s not something you can just abandon and start again.”