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The WazirX poll, unveiled on July 27, may have far-reaching consequences for its users, who have already suffered losses after the exchange lost 45% of user funds in the July 18 hack. This report explains the options presented in the poll, their impact on users, tax implications, and withdrawal limits, as well as the significance of the critical August 3 deadline.
The WazirX Poll Options
1. Access 55% of Your Funds Without Withdrawals, First Priority to Potential Recovery Proceeds:
This option allows users to access 55% of their portfolio without the ability to withdraw these funds immediately. The remaining 45% will be converted into Tether (USDT) or other tokens available with the Indian exchange. Users choosing this option will have priority when potential recovery proceeds are distributed.
2. Access 55% of Your Funds With Withdrawals, Second Priority to Potential Recovery Proceeds:
This option enables users to access and withdraw 55% of their portfolio. The token conversion applies here as well. Users opting for this will have second priority in receiving any potential recovery proceeds.
Poll results, updated every 15 minutes, are intended to guide WazirX’s final decision. The exchange will consider the poll’s outcome, ongoing investigations, platform liquidity, and evolving circumstances. Currently, the majority of users prefer the second option as they want speedy withdrawals.
How Will It Impact Users?
Users face several challenges due to the hack and the subsequent poll options.
1. Snapshot Date Controversy:
The snapshot for valuing user portfolios is set for July 21, three days post-hack. Critics argue this is unfair as WazirX continued to allow deposits and trading after halting withdrawals on July 18. This allowed ‘illegal’ trading, as WazirX did not have the token backing for these transactions due to the loss of 45% of user funds. Moreover, prices plummeted due to panic selling as people sold their crypto for INR after knowing that the fiat reserve was unaffected. This panic situation led to further losses.
2. Replacement of Stolen Tokens:
Users will receive a basket of tokens equivalent in value to their stolen tokens based on average prices from CoinMarketCap and select global exchanges as of July 21, 2024, at 8:30 p.m. IST. This replacement ensures users can access the value of their stolen tokens but does not address the issue of the snapshot date.
Tax Implications:
The tax implications for users are complex. Accessing and potentially withdrawing the converted tokens might trigger tax events, depending on the user’s jurisdiction. Users must consult tax professionals to understand their specific obligations, particularly regarding capital gains or losses from the converted tokens.
Withdrawal Limits:
The withdrawal limits depend on the option chosen by users. Those opting for immediate access and withdrawals (second option) may face limits imposed by WazirX based on ongoing liquidity and recovery efforts. Users must stay informed about any updates from the exchange regarding these limits.
Significance of the August 3 Deadline:
The August 3 deadline is critical as it marks the cut-off for users to make their choice in the poll. The outcome will shape WazirX’s final decision on fund recovery and distribution, influencing the immediate financial recovery of its users.
WazirX poll presents users with tough choices in the wake of a significant hack. The options available, along with their respective implications, underscore the challenges faced by the exchange and its users as they navigate this crisis.
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