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Post WazirX Hack, India's CoinDCX Starts Investor Protection Fund With $6M
The decision comes in the wake of the $230 million hack on crypto exchange WazirX last month.
Updated Aug 6, 2024, 11:30 p.m. Published Aug 6, 2024, 11:30 p.m.
- CoinDCX has established a crypto investors protection fund to compensate users in case of a security breach.
- The decision comes a few weeks after prominent Indian crypto exchange WazirX suffered a $230 million hack.
Indian crypto exchange CoinDCX's co-founder Sumit Gupta has told CoinDesk that his company has established an investor protection fund, saying that if other exchanges did this too "it would be better for the ecosystem."
The investor protection fund is designed to "compensate users for losses incurred in extremely rare scenarios such as security breaches" and at the start it will hold nearly $6 million (INR 50 crore), which comes solely from "our profits," Gupta said.
STORY CONTINUES BELOW
The decision comes in the wake of the $230 million hack – worth nearly 45% of customer funds which were in one wallet - suffered by WazirX last month. After the hack, Gupta was one of the first to criticize a work in progress plan suggested by WazirX to manage the customer funds.
"This is approximately 1.8% of the roughly $350 million customer funds we hold and we intend to continue to increase it over time. We will contribute 2% of whatever monthly brokerage income we make. The thought was to start somewhere and then continue to revaluate this number moving forward. International exchanges have done this. But in India we want to at least take the lead and start this as a standard."
Last month, WazirX's founder Nischal Shetty told CoinDCX that the hack of his exchange was rare, possibly the first of its kind.
Gupta denied that the creation of the fund was because such rare events could happen to CoinDCX too if one happened to WazirX.
"Nobody can assure 100% security. But how do we ensure customers remain protected even if there is the slightest chance of a breach. In our case, we don't concentrate our funds in one wallet, it's diversified. This is another step in that direction."
Read More: WazirX Co-Founder Nischal Shetty Says All Options Are on the Table for Fund Recovery
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