CoinSwitch has sued WazirX over funds locked on its platform after a July cyber attack. WazirX simultaneously filed for a 30-day moratorium with Singapore’s High Court.
CoinSwitch, a cryptocurrency exchange, has initiated legal proceedings against its embattled competitor, WazirX, in response to funds that remain on the latter’s platform as a result of an alleged cyber attack in July.
The lawsuit is being submitted on the same day that WazirX announced in a blog post that it filed for a 30-day moratorium with Singapore’s High Court yesterday.
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.
In India, WazirX is operated by Zanmai Labs, which is also known as Zettai. The company stated that the filing is not quite the same as seeking bankruptcy protection; rather, it is an endeavor to prevent insolvency and reopen withdrawals.
WazirX was the victim of a cyber attack on July 14, which led to the seizure of cryptocurrency assets valued at approximately $230 million (₹2000 crore). The incident predominantly impacted Ethereum-based ERC-20 tokens that were stored in WazirX’s hot wallets.
WazirX suspended all withdrawals in the aftermath, resulting in users being unable to access their funds and causing widespread concern and frustration. Partial withdrawals were reinstated by the exchange last week.
The company has an estimated $9.7 million (Rs 81 crore) in assets on WazirX, which includes Rs 12.4 crore in INR, Rs 28.7 crore in ERC-20 tokens, and Rs 39.9 crore in other tokens, according to a statement released by CoinSwitch. The exchange stated that this amounts to approximately 2% of CoinSwitch’s total funds, with the affected ERC20 tokens comprise less than 1% of CoinSwitch’s total assets.
CoinSwitch asserts that they have been unable to reach a satisfactory solution for the retrieval of the trapped funds, despite their consistent attempts to contact WazirX since the incident.
The company stated that they have made an effort to maintain regular communication with WazirX since the day of the incident, but they have been unable to find a solution to recover the funds that are currently trapped on their platform.
CoinSwitch, in response to the situation, stated that it maintains a minimum 1:1 ratio for each user’s crypto holdings on the platform by utilizing its own treasury. Additionally, it holds funds that are 1.51 times the user assets invested through the platform.
