Crypto exchange CoinSwitch has taken legal action against its beleaguered competitor WazirX over funds stuck on the latter’s platform following an alleged cyber attack in July.
The lawsuit is being filed the same day that WazirX announced in a blog post that yesterday it filed for a 30-day moratorium with Singapore’s High Court.
A hearing date has not yet been scheduled, the exchange wrote. If the moratorium is approved, it’ll give the exchange “breathing space while Zettai progresses with a restructuring, which represents the most efficient way to address users’ cryptocurrency balances on the Platform and facilitate recovery for users,” they wrote.
Zettai is the Zanmai Labs, which operates WazirX in India. The filing isn’t quite the same as seeking bankruptcy protection, but rather an attempt to prevent insolvency and reopen withdrawals, the company said.
The cyber attack on WazirX, which occurred on July 14, resulted in the theft of approximately $230 million (₹2000 crore) worth of cryptocurrency assets. The incident primarily affected Ethereum-based ERC-20 tokens stored in WazirX’s hot wallets.
In the aftermath, WazirX suspended all withdrawals, leaving users unable to access their funds and sparking widespread concern and frustration. The exchange resumed partial withdrawals last week.
According to a statement released by CoinSwitch, the company has approximately $9.7 million (Rs 81 crore) worth of assets on WazirX, including Rs 12.4 crore in INR, Rs 28.7 crore in ERC-20 tokens, and Rs 39.9 crore in other tokens. This represents about 2% of CoinSwitch’s total funds, the exchange said, with the affected ERC20 tokens accounting for less than 1% of CoinSwitch’s total assets.
How much funds were on WazirX?
Cumulatively we have Rs 12.4 cr in INR, Rs 28.7 cr in ERC20 tokens, and Rs 39.9 cr in other tokens on WazirX. This amounts to about 2% of all funds of CoinSwitch.
According to the WazirX claim, only ERC20 tokens were impacted in the alleged cyber…
— CoinSwitch: India’s Simplest Crypto App 🚀 (@CoinSwitch) August 28, 2024
CoinSwitch claims that despite regular attempts to contact WazirX since the incident, they have been unable to reach a satisfactory solution for retrieving the stuck funds.
“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,” the company stated.
In response to the situation, CoinSwitch stated that it utilized its own treasury to make sure that it maintains at least a 1:1 ratio for every user’s crypto holding on CoinSwitch and added that they hold funds 1.51 times the user assets invested through their platform.
When reached for comment, a CoinSwitch spokesperson told Decrypt that due to the ongoing legal nature of this matter, the company is unable to comment.
CoinSwitch has assured its users that their funds remain safe and secure, emphasizing that the exposure to WazirX “has no impact on user balances.”
The spokesperson said the company plans to publish its proof of reserves for the second time this year to maintain transparency.
Edited by Stacy Elliott.
Daily Debrief Newsletter
Start every day with the top news stories right now, plus original features, a podcast, videos and more.
Source: https://decrypt.co/246772/wazirx-seeks-30-day-moratorium-to-restructure-as-rival-sues-for-locked-funds
