Key Takeaways:
- CoinSwitch is taking legal action against WazirX after being unable to recover ₹810 million ($9.65 million) stuck on the platform
- WazirX lost $230 million in a hack and attempted to distribute the losses across users’ wallets
CoinSwitch, a leading cryptocurrency exchange aggregator, is pursuing legal action against rival platform WazirX after failing to recover funds trapped on the exchange following a significant cyberattack.
The incident, which occurred in July, saw WazirX lose approximately $230 million in a hack targeting one of its multisig wallets. In response, WazirX proposed a controversial “socialized loss” strategy, attempting to distribute the losses among its user base by locking 45% of their wallets.
This decision has sparked significant backlash, with CoinSwitch being one of the affected parties.
CoinSwitch revealed that it had around ₹810 million ($9.65 million) worth of assets stuck on WazirX’s platform, comprising ₹124 million in fiat currency, ₹287 million in ERC20 tokens, and ₹399 million in other cryptocurrencies.
Despite attempts to negotiate with WazirX for the recovery of these funds, CoinSwitch has been unable to reach a resolution. The exchange noted that it has been in constant communication with WazirX since the day of the incident but has now been left with no option but to seek legal redress.
WazirX’s response to the hack has been widely criticized, particularly for its decision to pause withdrawals and trading on the platform. Although the exchange recently reopened INR withdrawals, it remains under intense scrutiny.
On August 28, WazirX announced that it had applied for a moratorium under Singapore’s Insolvency, Restructuring, and Dissolution Act 2018, seeking time to reorganize its debts through its affiliated firm, Zettai Pte.
CoinSwitch, in a bid to reassure its users, emphasized that their funds on its platform are safe and that the exchange holds assets that are 1.51 times the value of user investments. The platform also announced plans to publish a transparency report in the coming days to further demonstrate its financial stability.
