All Out War Breaks Out as CoinSwitch Drags WazirX to Court

In a major development in WazirX hack saga, CoinSwitch, an Indian cryptocurrency exchange has decided to pursue legal action against WazirX owners for retrieval of their various funds invested in the exchange worth Rs 80 crore. In a set of explosive tweets posted on ‘X’, CoinSwitch claimed that the response of WazirX has been dismal regarding recovery of their funds thereby forcing them to seek legal options.

This is the first entity/customer of WazirX who has decided to pursue legal action against the exchange to recover their funds. WazirX owners are under heavy criticism due to their alleged mismanagement post the July 18 cyber hack that resulted in loss of Rs 2000 crores of user funds.

After a month of the hack, WazirX had announced that they will allow only 66% INR withdrawal for users while 100% crypto holdings are still in limbo. The users are angry with WazirX over the fact that they have been asked to take the hit despite alleged negligence of management that led to hack of multi-sig wallet on July 18.

The announcement by CoinSwitch came barely moments after WazirX co-founder Nischal Shetty announced that WazirX will file a moratorium application with the Singapore High Court under the Insolvency, Restructuring and Dissolution Act 2018.

The funds CoinSwitch has on WazirX include Rs 12.4 cr in INR, Rs 28.7 cr in ERC20 tokens, and Rs 39.9 cr in other tokens. This makes up about 2% of all funds of CoinSwitch on WazirX. As per WazirX, on July 18 only ERC20 tokens were impacted by the cyber attack on a multi-custodial wallet.

However, CoinSwitch has reassured its users that all funds on its platform are safe and no need to panic. 

They have also claimed that following the hack incident, CoinSwitch utilized its treasury to maintain a 1:1 ratio of user crypto holdings to ensure users’ security. CoinSwitch also plans to publish its proof of reserves for the second time this year to enhance transparency while WazirX has been hiding it since the attack took place. Since 2022, CoinSwitch has operated its own exchange, CoinSwitchX, where the majority of user orders are executed, further reducing the exposure of funds outside its ecosystem.

CoinSwitch also gave an explanation for keeping their funds on WazirX. “As an exchange aggregator, CoinSwitch maintains a small amount of liquidity on third-party crypto exchanges (7%) to ensure seamless trading for our users, as previously disclosed in our Proof of Reserves (Jul 2023, May 2024).”

This is a developing story. Follow The Crypto Times for more updates.

Also Read: Will the real WazirX owner please stand up?