CoinSwitch Files Lawsuit Against WazirX to Recover $9.6M in Trapped Assets
The Legal Battle Over India’s Largest Crypto Heist
Indian cryptocurrency exchange CoinSwitch has initiated legal proceedings against rival platform WazirX to recover approximately ₹810 million (\(9.65 million) in trapped funds. This development stems from WazirX's recent \)230 million cyberattack - the largest crypto heist in India’s history.
Background: The WazirX Security Breach
- July 2024 Attack: WazirX reported a massive security breach resulting in $230 million stolen
- Controversial Response: Proposed “socialized loss” strategy to distribute losses across all users
- Current Status: Filed for moratorium in Singapore High Court for restructuring
CoinSwitch’s Stuck Assets Breakdown
| Asset Type | Amount (₹) | Amount ($) |
|---|---|---|
| Fiat Currency | 124M | 1.48M |
| ERC20 Tokens | 287M | 3.42M |
| Other Cryptos | 399M | 4.75M |
| Total | 810M | 9.65M |
Key Developments in the Case
- Legal Action: CoinSwitch filed lawsuit after failed negotiations
- WazirX Restructuring: 6+ month process to proportionally distribute assets
- User Impact: Represents 2% of CoinSwitch’s total assets
Industry Implications
This case highlights critical challenges facing India’s crypto sector:
- Security Vulnerabilities: Exchanges remain prime targets for sophisticated attacks
- Regulatory Gaps: Lack of clear guidelines for breach responses
- Trust Erosion: Major incidents undermine confidence in crypto platforms
Company Responses
CoinSwitch:
- Maintaining 1:1 ratio for user holdings using treasury funds
- Only 7% of reserves kept on third-party exchanges
- Assets currently 1.51x user investments
WazirX:
- Proposed returning only 55% of customer holdings initially
- No insurance coverage for customer funds
- Recovery process could take years with uncertain outcomes
The Road Ahead
The outcome of this legal battle could set important precedents for:
- Liability Standards in crypto security breaches
- User Protection mechanisms for trapped funds
- Industry Best Practices for exchange security
WazirX founder Nischal Shetty has not yet responded to requests for comment regarding the lawsuit.
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