Post WazirX’s Crypto Theft, CoinDCX Rolls Out 50 Cr to Protect Investors

CoinDCX, a peer of WazirX, has established a first-of-its-kind crypto investors protection fund (CIPF) to reimburse consumers for losses sustained in security breaches or other unfavorable occurrences in response to the recent cyberattack on WazirX, which took $230 million from the cryptocurrency exchange.

Although CoinDCX has pledged to add 2% of brokerage income to the corpus, with yearly revisions and expanding the fund’s pool size over time, the amount of the CIPF is now fixed at INR 50 Cr.

“We have contributed the first 50 crore, which is the beginning point. We have depleted our funds and financial sheet. In an interview with Business Standard, CoinDCX co-founder Sumit Gupta stated, “At this point, we are contributing two percent of that brokerage income which would continue to add every month to this fund.”

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The cofounder of CoinDCX, Sumit Gupta, gave an explanation of the reasoning behind creating the fund, saying, “In the extremely unlikely event of a security breach or an adverse event, this dedicated fund will provide an additional layer of protection, ensuring that our customers’ assets remain secure and intact.”

Gupta underscored the importance of the unprecedented CIPF in fostering enduring confidence within the Indian cryptocurrency landscape.

A consumer compensation fund was introduced by CoinDCX, one of the earliest cryptocurrency exchanges in the nation.

Following the WazirX theft, cryptocurrency investors have expressed concerns regarding the safety of their holdings on Indian exchanges. This has led to the creation of the fund.

Concerns are also raised by WazirX’s initial decision to “socialize the losses,” or divide the financial burden of the loss among its clientele.

“The company (WazirX in this instance), its treasury, and its assets should ALWAYS bear the brunt of losses. Making clients directly bear the 45% losses is absurd; I have not seen any pledge of this kind from the corporation,” Gupta had earlier posted on social media platform X (formerly Twitter).

When rival WazirX revealed that 45 percent of its assets were housed in a single wallet, Gupta was shocked.

“I believe that the case that occurred in WazirX was quite regrettable. And it is not what most people do. “You don’t put all the eggs in one basket when you keep 50 percent of your money in one wallet,” he remarked.

As per Gupta, the majority of exchanges possess insurance at the custody provider level, which is backed by a limited number of institutions worldwide that are able to provide underwriting. He stated that the outcome for WazirX would depend on whether or not Liminal, its custody partner, has purchased this insurance. According to earlier claims made by WazirX, Liminal may have been the source of the security breach.