- CoinSwitch files lawsuit to recover $9M in trapped assets post-WazirX hack, emphasizing user funds remain unaffected.
- WazirX seeks a 30-day moratorium to restructure and address user balances, aiming to prevent insolvency amid legal action.
- Legal action by CoinSwitch against WazirX complicates exchange’s recovery efforts following the recent $230M cyber attack.
Indian cryptocurrency exchange CoinSwitch has initiated legal action against its rival WazirX in an attempt to recover over $9 million in trapped assets. The situation stems from WazirX’s recent $230 million hack, which left CoinSwitch unable to access its substantial assets held on the WazirX platform. According to CoinSwitch, the trapped assets include fiat currency, ERC20 tokens, and other cryptocurrencies.
Despite ongoing efforts to recover the funds, CoinSwitch has been unsuccessful, forcing the exchange to take legal steps. Notably, the affected assets represent less than 1% of CoinSwitch’s total holdings, as the exchange emphasized that user funds remain unaffected. CoinSwitch has been leveraging its treasury reserves to maintain a 1:1 ratio for user holdings, ensuring that users’ funds remain secure during this turbulent period.
WazirX’s Response and Moratorium Request
In response to CoinSwitch’s legal action, WazirX has filed for a 30-day moratorium with Singapore’s High Court. This request, if granted, would provide the exchange temporary relief from its financial obligations, giving it more time to restructure and restore users’ cryptocurrency balances. WazirX’s parent company, Zettai, which operates the platform in India, described this step as crucial to prevent insolvency and allow the exchange to eventually reopen withdrawals.
Notably, WazirX founder and CEO Nischal Shetty responded to CoinSwitch’s lawsuit via social media, asserting that the platform would treat all users fairly, regardless of the size of their assets. The ongoing legal battle has drawn attention to the precarious nature of the cryptocurrency sector in India, where platform security and trust are of the utmost importance.
Here’s the thing, we will treat all users fairly.
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Large or small, no side deal. If that means legal actions, so be it.
Fairness to all ❤️🙏💪google news — Nischal (Shardeum) 🔼 (@NischalShetty) August 28, 2024
Impact of Legal Action on Restructuring Efforts
The CoinSwitch lawsuit and WazirX’s request for a moratorium have highlighted the challenges facing the Indian crypto industry. As WazirX seeks to restructure and recover from the hack, the legal action from CoinSwitch adds further complexity to the exchange’s efforts. However, the moratorium, if granted, may provide WazirX the time it needs to address its users’ balances and regain their trust.
The future of WazirX remains uncertain as the hearing date for the moratorium request has yet to be scheduled. Meanwhile, CoinSwitch continues to pursue its legal case, seeking a resolution to the issue of the trapped funds.
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