Liminal Custody has claimed that WazirX crypto exchange management still holds Rs 420 crore worth of user funds under their control even three months after the Rs 2000 crore hack and public fallout.

Background of the Conflict

Liminal Custody, the former security partner of the WazirX exchange, has accused it of a misinformation campaign, falsely attributing responsibility for the hack to them. Liminal also criticizes WazirX for allegedly misleading users and the Singapore Court by releasing 240,000 public wallet addresses in their affidavit. The company asserts that prior to the July 18 cyber hack, WazirX managed approximately Rs 3363 crore ($400 million) of user funds.

Accusations Against WazirX

An official statement from Liminal claims that even 75 days after the hack, WazirX was holding over USD 175 million in assets on the Liminal platform. Currently, USD 50 million of these assets remain in wallets accessed via Liminal Infrastructure. A spokesperson for Liminal expressed disappointment that WazirX did not provide a detailed post mortem of the breach but instead publicly shifted blame to Liminal via a social media post, which was later retracted.

Current Situation and Community Reaction

WazirX co-founder Nischal Shetty admitted that some user funds are still with third-party exchanges and old custodians. He mentioned their difficulty in finding a suitable platform that accepts all crypto tokens. The Proof-of-Reserve work is ongoing, and WazirX faces criticism for transferring funds to unregistered exchanges, like Bybit. Some community members express concerns about potential money laundering and suggest that India's Enforcement Directorate could investigate WazirX's activities.

The tension between WazirX and Liminal Custody intensifies with increasing allegations of misinformation and fund mismanagement. Until WazirX completes the proof of reserve process and ensures secure fund management, they must work to regain user and regulatory trust.