thenewscrypto.com
- WazirX denies fund misuse, attributes delays to ongoing custodian onboarding.
- Security breach led to $230M loss, sparking investigations and liabilities.
Indian cryptocurrency exchange, WazirX, is back in the spotlight following accusations from CoinSwitch’s co-founder, Ashish Singhal, regarding the transfer of over $73 million in cryptocurrency to exchanges like Bybit and KuCoin. Singhal expressed concerns about WazirX’s financial stability, fuelling speculation over the exchange’s handling of user funds. However, WazirX’s co-founder, Nischal Shetty, refuted these allegations, calling it a “false narrative” and a “coordinated campaign.”
False narrative, looks like coordinated campaign.
— Nischal (Shardeum) 🔼 (@NischalShetty) October 22, 2024
“secretly moved”? It was us who disclosed the addresses! We all know how blockchain works, everything is traceable. POR would anyways be revealing all this.
First Step: Share wallet addresses:[DONE]
Second step: Share POR… pic.twitter.com/n1oKYREsU0
Shetty explained that WazirX had transparently disclosed its wallet addresses. And noted that the ongoing proof of reserves (POR) process would reveal all transactions. He clarified that funds were transferred to external exchanges because the platform is still onboarding a custodian. Custodians complicate the process by providing limited support for all tokens.
WazirX emphasised that, despite the delay, the exchange prioritised careful consideration of its custody options. Shetty assured users that the exchange continues to use third-party exchanges for storing some tokens until a suitable custodian is finalised.
WazirX’s Legal Tensions
The exchange has been grappling with the aftermath of a major security breach in July 2024. It saw approximately $230 million in digital assets stolen, representing 45% of WazirX’s assets. The incident left the company facing liabilities amounting to $546 million. Subsequently, WazirX disclosed over 240,000 wallet addresses as part of its ongoing commitment to transparency.
Following the hack, WazirX was granted a four-month moratorium by the Singapore High Court in September, with plans to establish a 10-member creditors’ committee by October 9 to manage its liabilities. Indian government agencies, including the Financial Intelligence Unit (FIU) and CERT-In, have since launched investigations into the illegal transfer of funds, interrogating WazirX executives.
As legal tensions rise between WazirX and CoinSwitch, the latter has announced intentions to recover INR 12.4 crore (approximately $1.5 million) in cash and cryptocurrencies deposited on the platform.