CoinSwitch, a well-known Indian cryptocurrency exchange, is taking legal action against rival platform WazirX to get back funds that are stuck. This shows how much damage was caused by a cyber attack on WazirX, resulting in the theft of $230 million worth of digital assets.
The legal action comes after more than a month of WazirX reporting the security breach and suggesting a controversial plan to spread the losses among all its users.
CoinSwitch, which runs an exchange aggregator, has approximately ₹810 million ($9.65 million) worth of assets trapped on WazirX’s platform. This includes ₹124 million in cash, ₹287 million in ERC20 tokens, and ₹399 million in other cryptocurrencies.
“We have been trying to communicate with WazirX since the incident, but we have not been able to find a solution to recover our trapped funds,” stated CoinSwitch in a detailed statement.
The Bengaluru-based company mentioned that the funds stuck on WazirX make up about 2% of CoinSwitch’s total assets. Less than 1% of its assets were affected by the cyber attack, primarily impacting ERC20 tokens.
CoinSwitch, backed by investors like a16z, Coinbase, and Peak XV, mentioned that it is using its own funds to maintain a 1:1 ratio for users’ holdings on its platform. The company’s total assets exceed the assets invested by users on its platform.
CoinSwitch informed that it keeps a small part of its liquidity, about 7% of its reserves, on other exchanges to ensure smooth trading for its users.
The lawsuit filed by CoinSwitch sheds light on the difficulties faced by India’s cryptocurrency industry due to regulatory uncertainly and security issues. The WazirX incident, labeled as India’s biggest crypto theft, has further diminished trust in the industry.
Last month, WazirX revealed plans to resume operations a week after the attack, proposing to return only 55% of customer funds while locking the remaining 45% in USDT-equivalent tokens.
WazirX founder Nischal Shetty disclosed that the company did not have insurance for customer funds due to limited options. He warned that the recovery process could take years and there was no guarantee of success.
Shetty has not responded to a request for comment at this time.
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