CoinDCX aims to add more funds to this CIPF in the near future
CoinDCX aims to keep its users’ trust intact
As of now, no other Indian crypto exchange has announced a similar step
CoinDCX was launched in 2018 and is headquartered in Mumbai
Photo Credit: X/ @CoinDCX
Indian crypto exchange CoinDCX announced the launch of a crypto investor protection fund (CIPF) worth Rs. 50 crores on Wednesday, August 7. This decision from CoinDCX comes after WazirX users were left to bear losses in the aftermath of a hack that drained one of its wallets off over $230 million (roughly Rs. 1,900 crore). With this, CoinDCX has become the first Indian crypto exchange to have launched a fund-pool in the interest of safeguarding its users in financially vulnerable situations.
Announcing the CIPF, CoinDCX co-founder Sumit Gupta said, “this dedicated fund will provide an additional layer of protection, ensuring that our customers' assets remain secure and intact in an extremely rare event of a security breach or an adverse event.”
In the first phase of its launch, the CIPF fund pool is worth Rs. 50 crore – but this amount will grow in the coming times. As per Gupta, two percent of the total brokerage income will be infused into the corpus to ensure that the locked amount increases gradually with time.
“We will continue to monitor the fund's size, maintaining the balance at a level adequate to safeguard our users assets. The CIPF will be one of its kind and a significant step towards building long-term trust in the Indian crypto ecosystem,” Gupta added.
The CoinDCX team is also sharing details about this announcement on social networking platforms, claiming that this emergency corpus for investors is part of the exchange's ‘defense in depth' philosophy.
1/ :rotating_light: Announcing a new First for Indian Crypto Exchanges: CoinDCX's INR 50 Crore Crypto Investors Protection Fund (CIPF)@smtgpt, @mri_gup, I, and the entire 500+ team at @CoinDCX work hard to provide the best investing and trading experience and also ensure everyone's funds are… pic.twitter.com/kbcp1anX7J
The WazirX wallet was hacked on July 18 under the oversight of Liminal Custody. Both WazirX and Liminal have cited their internal investigations to brush off the responsibility of the breach from their respective ends.
WazirX has suspended deposits, withdrawals, as well as trading from its platform since the attack behind which, North Korea's Lazarus Group is the suspected facilitator.
The troubled exchange, in order to restore financial balance, has hatched a controversial plan under which, “users with 100 percent of their tokens in the ‘not stolen' category will receive 55 percent of those tokens back. The remaining 45 percent will be converted to USDT-equivalent tokens and locked.”
WazirX users have criticized the plan, which imposes losses even on those whose funds were not stolen in the attack. Many in the crypto industry have called for WazirX to revise its approach, but the exchange remains committed to its original plan.
CoinDCX's CIPF is designed to provide support in similar situations, should they arise within its ecosystem in the future.
“Impressive! Definitely a great move by CoinDCX team; right approach at the troubled times & this will only make users trust them,” Sana Afreen, Director of Partnerships at Rizzle told Gadgets360 commenting on the devlopment. Afreen has funds stored in WazirX and is awaiting the restart of services on the platform.
Several from the crypto circle, however, remain concerned that such corpuses could only work if they are large scale because damage caused by hackers could easily exceed CoinDCX's Rs. 50 crore – and what happens then could negate the availability of such a fund pool all together.
Back in 2022 when the FTX crypto exchange collapsed in the US, Indian exchanges had rushed to adopt the trend of publishing regular transparency reports to give a glimpse of into their treasuries to their users and ensure financial security. CoinDCX, with this CIPF corpus, could have ignited just another trend, which may or may not be adopted by other Indian exchanges.
Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article.
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