43 pc of WazirX customers to lose their money, demand grows for scrutiny

New Delhi, Sep 4 (IANS) After a massive Rs 2,000 crore data breach, more bad news awaits WazirX customers — including at least 4.2 million Indian users — as nearly 43 per cent of them are likely to lose their money. According to industry and legal experts, this urgently requires further scrutiny of the crypto trading platform by the government regulators.

The company informed customers in a town-hall meeting earlier this week, attended by WazirX Co-founder Nischal Shetty, that customers will probably lose 43 per cent of the funds they had invested in the platform.George Gwee, a director at restructuring firm Kroll working with WazirX, reportedly said that the best-case scenario is a return of “anywhere between 55 per cent and 57 per cent of the funds.”The Singapore High Court was set to hear WazirX’s request for six months’ protection while it restructures its liabilities. The request was made by Singapore-incorporated Zettai, whose subsidiary Zanmai India operates the exchange.

In the meeting, Shetty said the firm is in talks with 11 partners who can come in as potential white knights. Regarding the recovery of funds, Shetty said that the objective is to reduce the gap between the original assets of customers and the funds which will be recovered.According to legal experts, a thorough investigation by state authorities is needed considering the magnitude of the cyber-crime.

The whole episode reiterates the increasing need for effective regulation and rules for crypto-trading in India which can help safeguard investors and broader national interests, they added.

Meanwhile, Indian cryptocurrency exchange CoinSwitch has sued WazirX to recover the funds stuck on Shetty-run platform.Cumulatively, CoinSwitch has Rs 12.4 crore in Indian rupees, Rs 28.7 crore in ERC20 tokens, and Rs 39.9 crore in other tokens stuck on WazirX, amounting to about 2 per cent of all funds of CoinSwitch.The WazirX breach highlights the critical imperative to have enhanced security protocols and robust risk management strategies to safeguard investor interest and assets, said experts.