Title: CoinSwitch Sues WazirX Over $230M Cyber Attack: Impact on Indian Cryptocurrency Market Revealed
In a recent development, CoinSwitch, a leading Indian cryptocurrency exchange, has filed a lawsuit against rival platform WazirX to recover funds lost in a cyber attack. This incident sheds light on the extensive damage caused by the security breach at WazirX, resulting in the theft of $230 million worth of digital assets.
CoinSwitch disclosed that it has approximately ₹810 million ($9.65 million) trapped on WazirX's platform, comprising ₹124 million in fiat currency, ₹287 million in ERC20 tokens, and ₹399 million in other cryptocurrencies. Despite ongoing attempts to resolve the issue with WazirX, a solution has yet to be reached.
The Bengaluru-based startup emphasized that the funds stuck on WazirX make up around 2% of its total assets, with less than 1% affected by the cyber attack. CoinSwitch is utilizing its treasury to ensure a 1:1 ratio for user holdings and maintains a liquidity reserve of 7% on third-party exchanges for seamless trading.
This legal action underscores the challenges faced by India's cryptocurrency industry, exacerbated by regulatory uncertainties and security risks. The WazirX incident, dubbed as the country's largest crypto heist, has further undermined trust within the sector.
Following the attack, WazirX announced plans to resume operations, proposing to return 55% of customer holdings while locking the remaining 45% in USDT-equivalent tokens. Founder Nischal Shetty revealed that the company does not have insurance for customer funds and cautioned that recovery efforts could be prolonged and uncertain.
This situation serves as a cautionary tale for investors and users in the cryptocurrency market, emphasizing the importance of security measures and regulatory compliance. It highlights the need for due diligence and risk assessment when engaging with digital assets, as incidents like these can have significant financial implications.