CoinSwitch, a major cryptocurrency exchange in India, is suing its rival, WazirX, to recover funds trapped on the latter’s platform following a significant cyberattack. The breach, which resulted in the theft of $230 million worth of digital assets, has left CoinSwitch with approximately Rupees 810 million ($9.65 million) in assets stranded on WazirX. This sum includes Rupees 124 million in fiat currency, Rupees 287 million in ERC20 tokens, and Rupees 399 million in other cryptocurrencies.
Despite ongoing attempts to resolve the issue, CoinSwitch has been unable to recover its funds. The company highlighted its efforts in a detailed thread on X, expressing frustration over the lack of progress in retrieving its assets.
It's been over a month since WazirX, a major crypto exchange operating in India, claimed that a cyber attack on their platform led to the theft of $230 million (~ Rs 2000 cr) worth of funds.
— CoinSwitch: India's Simplest Crypto App 🚀 (@CoinSwitch) August 28, 2024
We have attempted to be in regular touch with WazirX since the day of the incident but…
In response to the attack, WazirX has sought a moratorium from Singapore’s High Court to aid in its restructuring efforts. The company is implementing a scheme of arrangement to proportionally distribute available assets among users as unsecured creditors. This process is expected to take at least six months as WazirX explores ways to recover more tokens.
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The trapped funds represent about 2% of CoinSwitch’s total assets, with less than 1% affected by the cyberattack, which primarily impacted ERC20 tokens. CoinSwitch, supported by investors like a16z, Coinbase, and Peak XV, is using its treasury to maintain a 1:1 ratio for users’ holdings. The company reports that its overall assets are 1.51 times the user assets invested through its platform.
To ensure smooth trading for its users, CoinSwitch keeps about 7% of its liquidity on third-party exchanges. The lawsuit underscores the ongoing issues within India’s cryptocurrency industry, which is dealing with regulatory uncertainties and security challenges. The WazirX breach, described as India’s largest crypto heist, has further diminished trust in the sector.
Last month, WazirX had indicated plans to resume operations within a week of the attack, proposing to return only 55% of customer holdings and locking the remaining 45% in USDT-equivalent tokens. WazirX founder Nischal Shetty admitted that the company had no insurance for customer funds and warned that recovery efforts might take years, with no guarantee of success.
