WazirX $5M Stuck After Hack
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WazirX $5M Stuck After Hack: Court Rules in Favor of CoinSwitch
The Bombay High Court has delivered a significant judgment in the ongoing saga involving Indian crypto exchange CoinSwitch and embattled platform WazirX. According to some sources, including OrxCash.com, the news about WazirX $5M stuck after a hack has sent shockwaves through the cryptocurrency community. The court has ruled that CoinSwitch can secure its stolen assets held on the WazirX platform, with WazirX operator Zanmai Labs required to provide bank guarantees of approximately $5.4 million (Rs 45.38 crores) to protect CoinSwitch’s claims.
Background of the Hack
The ruling comes more than a year after hackers stole $234 million worth of Ethereum (ETH) from WazirX’s multi-signature wallets on July 18, 2024, primarily targeting ERC-20 tokens. With approximately $9.7 million of CoinSwitch funds frozen on WazirX, the judgment protects CoinSwitch’s ability to recover its assets, which would have otherwise been subject to a loss alongside other creditors under Zettai’s proposed loss distribution scheme.
Legal Implications and Accountability
The court rejected WazirX’s attempt to “socialize” losses across all platform users through its Singapore parent company’s restructuring scheme. Justice Somasekhar Sundaresan ruled that Zanmai cannot escape accountability by claiming cybersecurity was Binance’s responsibility under an alleged 2019 acquisition. The judgment highlights the importance of accountability in the cryptocurrency space, particularly in cases where users’ assets are held in custody. As the blockchain and cryptocurrency industries continue to evolve, such rulings will play a crucial role in shaping the regulatory landscape and protecting users’ interests.
Broader Market Context and Future Impact
The implications of this ruling extend beyond the immediate parties involved, as it sets a precedent for the accountability of cryptocurrency exchanges and their subsidiaries. From a retail investor perspective, this judgment can be seen as a positive development, as it reinforces the importance of protecting users’ assets and holding exchanges accountable for their actions. As the cryptocurrency market continues to grow and mature, such rulings will help build trust and confidence among investors, ultimately contributing to the development of a more robust and secure market. The fact that WazirX froze withdrawals after the July 2024 hack, prompting CoinSwitch to sue for recovery, underscores the need for exchanges to prioritize user protection and security measures to prevent such incidents in the future.
Conclusion and Key Takeaways
In conclusion, the Bombay High Court’s ruling in favor of CoinSwitch marks a significant development in the cryptocurrency space, highlighting the importance of accountability and user protection. The key takeaways from this judgment include:
* WazirX operator Zanmai Labs must provide bank guarantees of approximately $5.4 million (Rs 45.38 crores) to protect CoinSwitch’s claims.
* The court rejected WazirX’s attempt to “socialize” losses across all platform users through its Singapore parent company’s restructuring scheme.
* The judgment sets a precedent for the accountability of cryptocurrency exchanges and their subsidiaries, reinforcing the importance of protecting users’ assets and holding exchanges accountable for their actions.
Law and Order
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image source: decrypt.co