WazirX reports 40% assets dip in reserves after July security breach

Embattled crypto firm WazirX released its first Proof of Reserves (PoR) report following a security breach in July that resulted in the loss of about 40.4 per cent of its assets compared to its reserves in June.

 

The crypto exchange reported that its total assets, including funds held on-chain, with third-party exchanges, and illiquid assets, amounted to Rs 2,506.79 crore ($298.17 million). In comparison, the company had reported total holdings of Rs 4,203.88 crore in June.

 

In comparison, another Indian crypto firm, CoinSwitch, reported total holdings of Rs 2,514.91 crore, including crypto and Indian rupee (INR) balances.

 

The decline in WazirX’s holdings comes as the firm undergoes restructuring after a cyberattack led to the theft of over $230 million in July.

 

“We are also working on onboarding new custodians and will update the PoR accordingly. We will ensure we communicate with you about the new custodians. We’re trying to find a custody provider who can offer insurance for the funds so that loss is minimised, even in worst-case scenarios,” the company said in a statement.

 

PoR is the ‘proof’ that a financial entity holds the assets it claims to have. A PoR audit is published by crypto firms to inform customers that a custodian or crypto platform is adequately liquid, allowing users to withdraw their funds at any time. It provides transparency on users’ and the crypto exchange's holdings.

 

Last month, a Singapore court granted a four-month moratorium to WazirX, which the embattled firm will use to restructure its business without the pressure of legal proceedings.

 

A moratorium offers applicants temporary relief from legal proceedings.

 

The crypto exchange said it was restructuring and, as part of that, was seeking a white knight to provide capital and pursue partnership and collaboration.

 

This restructuring includes implementing revenue-generating products, sharing profits with users, tracing and recovering stolen crypto assets, and/or allowing users who need urgent liquidity to withdraw crypto assets more quickly and exit the restructuring process.