CoinSwitch CEO Claims WazirX Transferred $75M to Exchanges Secretly

Highlights:

• CoinSwitch claims WazirX transferred $75M to Bybit, and KuCoin after the July hack.
• Legal filings show WazirX revealed 240K wallets, complicating fund tracking.
• The Delhi High Court has ordered a probe into the WazirX hack, allowing users to file civil suits.

Ashish Singhal, CEO of CoinSwitch, has accused WazirX of moving $75 million of funds to overseas exchanges without informing customers. After the incident, he claims WazirX transferred funds to other exchanges, such as Kucoin and Bybit. This has drawn concerns about the transparency of the platform after the hack.

🚨 Breaking: WazirX reportedly transferred $75 million in user funds to platforms like KuCoin and Bybit without user consent! Concerns over transparency and security are rising. #crypto #WazirX #KuCoin #Bybit pic.twitter.com/4e0pByykjc

— Chris Beth (@chrissbnbethh) October 21, 2024

Asset Transfers and Lawsuit Against WazirX

CoinSwitch has disclosed that more than $72 million worth of WazirX’s assets were transferred to Bybit. An additional $1.5 million was sent to KuCoin. CoinSwitch claims that these transactions took place shortly following the cyberattack, indicating a possible effort to conceal assets while under investigation.

CoinSwitch has uncovered concerning details regarding the management of user assets by WazirX following an analysis of 200,000 wallet addresses. A large number of wallets have balances below $10, with 18,000 containing no money. Although these sums are small for individual wallets, the scale of transfers raises questions. 

CoinSwitch filed a lawsuit against WazirX to retrieve funds that were locked following the cyber attack. CoinSwitch is working to reclaim more than $9 million in assets from WazirX. It accuses WazirX of locking its assets leading the platform to tap into its reserve to compensate for user losses. 

WazirX’s Moratorium Request and Restructuring Plans

Zettai, the parent company of WazirX, submitted a moratorium request to the Singapore High Court. Zettai is the parent company of Zanmai Labs which manages the WazirX cryptocurrency exchange in India. The moratorium aims to give the company sufficient time to reorganize its debts. It also hopes to recover some of the assets that were stolen. The moratorium gives the company temporary legal protection as it restructures. 

Zettai’s plan for restructuring proposes that unsecured creditors, referred to as users, would be entitled to a proportionate share of any assets that can be recovered. Zettai hopes to have completed the process in six months.

WazirX filed an affidavit in the High Court of Singapore as part of the ongoing legal case. WazirX was aiming to prove the transparency of the process by the filing. However, analysis of the addresses shows that most of the submitted addresses have zero or small balances. 

📢 Disclosure of 240,000+ wallet addresses pursuant to debt restructuring process

At WazirX, we’ve always believed that transparency is key to building and maintaining trust with our users. Today, we’re taking another step forward in that journey by sharing something… pic.twitter.com/JN47z21PI3

— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) October 17, 2024

Delhi High Court Orders Investigation 

In response to the July hack, the Delhi High Court has ordered an official investigation. The court has also directed the Deputy Commissioner of Police of the Intelligence Fusion and Strategic Operations unit to file a report following a petition filed by Jaivir Bains.

The court has also allowed users to initiate civil suits against the company. This move gives users who were affected the ability to get back their locked funds. The company has locked over $4.4 million of funds belonging to its users. More users are expected to come forward after the ruling by the court. As the investigation unfolds, both exchanges face increasing scrutiny over their actions during and after the incident.