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.