- CoinSwitch has recently initiated legal proceedings against WazirX, highlighting the ongoing turmoil in the cryptocurrency exchange market.
- The lawsuit coincides with WazirX’s request for a 30-day moratorium in Singapore, raising questions about the exchange’s financial stability.
- A CoinSwitch representative noted, “We have attempted to be in regular touch with WazirX since the day of the incident but have not been able to reach a solution to recover the funds that are stuck on their platform.”
In a significant development within the crypto exchange landscape, CoinSwitch has filed a lawsuit against WazirX following a cyber attack that has left funds trapped on the latter’s platform, highlighting urgent liquidity issues.
CoinSwitch Takes Legal Action Amidst WazirX’s Challenges
CoinSwitch has formally filed a lawsuit against WazirX, following a tumultuous incident that occurred on July 14, when a cyber attack led to the theft of around $230 million in cryptocurrencies. This legal action comes as WazirX, now grappling with severe operational challenges, recently announced via their blog that they had submitted a request for a 30-day moratorium with the Singapore High Court. This motion is intended to create a buffer period for WazirX, allowing its parent company, Zettai (operated by Zanmai Labs), to focus on restructuring efforts aimed at resolving the significant liquidity issues that have arisen due to the attack.
The Implications of the Cyber Attack on WazirX’s Operations
The cyber breach that WazirX experienced has had substantial repercussions, particularly affecting Ethereum-based ERC-20 tokens stored in the exchange’s hot wallets. In the wake of this incident, WazirX halted all withdrawals, translating into users being unable to access their own assets, which has ignited widespread unrest and anxiety within the user community. Although the exchange has recently resumed partial withdrawals to mitigate user concerns, the extent of the losses and the ongoing operational constraints have prompted CoinSwitch to take decisive legal action in a bid to reclaim its trapped assets.
CoinSwitch’s Financial Exposure and Its Response Strategy
According to statements released by CoinSwitch, the firm has about $9.7 million worth of assets stuck on WazirX, including a combination of cash and various cryptocurrencies. Significantly, these assets represent approximately 2% of CoinSwitch’s overall funds and include about ₹12.4 crore in INR and ₹28.7 crore in ERC-20 tokens. In light of these developments, CoinSwitch has committed to ensuring that its users’ investments remain safe, maintaining a 1:1 reserve ratio for every user’s holdings on its platform. This level of prudence underscores their operational integrity amid external challenges.
Transparency and User Assurance in Turbulent Times
A spokesperson for CoinSwitch emphasized that the firm’s exposure to WazirX does not diminish the security of their users’ balances. In a commitment to transparency, CoinSwitch plans to publish its proof of reserves again, demonstrating its efforts to reassure users regarding the safety of their assets, especially during such a turbulent period for the broader cryptocurrency market.
Conclusion
In summary, the legal proceedings initiated by CoinSwitch against WazirX mark a pivotal moment in the ongoing saga of cryptocurrency exchanges dealing with cybersecurity threats and financial distress. As WazirX navigates its restructuring efforts, the exchange’s future and user access to their funds remain uncertain. Meanwhile, CoinSwitch’s proactive measures illustrate a commitment to accountability and user safety in an increasingly complex cryptocurrency environment.
