CoinSwitch, an Indian cryptocurrency exchange, is suing its rival WazirX to recover $9.6 million in assets that have been stuck on WazirX’s platform since a $230 million cyberattack in July.
Reasons for the Lawsuit
CoinSwitch announced the legal action on social media after multiple attempts to resolve the issue directly failed. These trapped assets account for about 2% of CoinSwitch’s total holdings.
WazirX's Legal Troubles
WazirX, which lost approximately 45% of its assets in the hack, is currently facing mounting legal challenges. On August 3, a petition was filed in India requesting an investigation into possible fraud by the National Company Law Tribunal. This petition could lead to a freeze on WazirX’s assets. Furthermore, WazirX’s parent company, Zettai Pte, is seeking a six-month moratorium from Singapore’s High Court to provide WazirX legal protection from creditors while it restructures its liabilities.
Impact on the Crypto Industry
The lawsuit by CoinSwitch adds further complexity to WazirX’s challenges and highlights the vulnerability of India’s crypto sector. Sathvik Vishwanath, CEO of Unocoin, emphasized that while the sector is still young, proper regulation is lacking. India’s Finance Ministry is expected to release a consultation paper on cryptocurrency regulation in September.
This lawsuit and other recent events highlight the serious issues of security and fraud in the cryptocurrency industry. The community eagerly awaits possible reforms in this area.
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