- CoinSwitch sues WazirX over more than $9.7 million in assets frozen after a $230 million cyberattack.
- WazirX seeks a 30-day moratorium to restructure and address frozen withdrawals.
- WazirX has allowed partial INR withdrawals, but crypto withdrawals remain suspended.
CoinSwitch, a leading cryptocurrency exchange in India, has initiated legal proceedings against rival WazirX following a July cyberattack that resulted in the theft of roughly $230 million in assets.
The lawsuit comes as WazirX asks the High Court in Singapore for a 30-day moratorium to restructure its operations and address user withdrawals, which remain largely frozen.
CoinSwitch sues to recover $9.7 million frozen on WazirX
The cyberattack on WazirX on July 14 sent shockwaves through the crypto community, particularly in India.
The breach resulted in the theft of approximately $230 million in crypto assets, mainly ERC-20 tokens on Ethereum that were held in WazirX’s hot wallets. In the immediate aftermath, WazirX suspended all withdrawals, leaving users unable to access funds and sparking widespread concern and frustration.
WazirX, which bills itself as India’s largest crypto exchange, has since permitted partial INR withdrawals, but crypto withdrawals remain suspended indefinitely.
CoinSwitch has moved to recover about $9.7 million in assets it says are frozen on the WazirX platform. Those funds reportedly include INR balances and multiple token holdings: 12.4 million rupees in cash-equivalent INR, 28.7 million rupees worth of ERC-20 tokens, and 39.9 million rupees in other tokens, representing roughly 2% of CoinSwitch’s total holdings.
CoinSwitch says it repeatedly attempted to resolve the matter directly with WazirX but received no meaningful response, leaving legal action as its only recourse.
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.
We have attempted to be in regular touch with WazirX since the day of the incident but…
— CoinSwitch: India’s Simplest Crypto App 🚀 (@CoinSwitch) August 28, 2024
CoinSwitch has reassured its users that their funds remain secure, stating it used its own treasury to guarantee a 1:1 backing for each user’s crypto holdings on its platform. The company also plans to publish a proof of reserves for the second time this year to maintain transparency.
WazirX seeks court-approved breathing room
In response to the escalating situation, WazirX filed for a 30-day moratorium in the High Court of Singapore, which—if granted—would temporarily relieve the exchange of certain financial obligations.
The moratorium request, filed by Zettai—the parent company that operates WazirX in India—is described as essential to give the platform time to pursue its restructuring plans.
The proposed restructuring aims to reconcile users’ crypto balances and facilitate their recovery. While filing for a moratorium is not the same as formal bankruptcy protection, it is a strategic step intended to prevent insolvency and, ultimately, reopen withdrawals.
No hearing date for the moratorium application has been set, leaving WazirX’s future uncertain as it faces both CoinSwitch’s legal action and the broader challenge of restoring user trust.
The dispute between CoinSwitch and WazirX underscores the fragile nature of the cryptocurrency industry, where platform security and user confidence are critical.
As the situation develops, the outcomes of these legal and restructuring efforts will carry significant implications for India’s broader crypto community and beyond.