Industry insiders say WazirX is having trouble finding a reputed exchange serve as a third party service provider, after the loss of reputation of the management post the Rs 2000 crore hack.
WazirX Transfers Rs 606 Crore in User Funds to Unregistered Exchange ByBit After Massive Cyber Hack
In a major development, WazirX has transferred $72.13 million (approx. Rs 606 crore) of remaining user funds to ByBit, an exchange that is unregistered in India, following a massive cyber hack that resulted in a 45% loss of user funds, valued at Rs 2,000 crore.
Concerns Over ByBit’s User Policy
ByBit’s user policy raises serious concerns for WazirX users, as it states that the exchange will not be liable for any user compensation in cases of events beyond its control, including cyber hacks. Additionally, ByBit caps its liability at $10,000, which may offer little protection to users in case of another breach.
About ByBit and Its Regulatory Status
ByBit, launched in 2018 by Chinese entrepreneur Ben Zhou, is headquartered in Singapore.
It is not registered with the Financial Intelligence Unit (FIU) in India, making it technically unable to conduct business within the country.
ByBit operates under regulations from Dubai, Cyprus, and Kazakhstan, but lacks registration in India, which could limit user recourse in unforeseen events.
WazirX’s Transfer Raises User Safety Concerns
The transfer of funds to ByBit, an unregistered platform, has alarmed WazirX’s 4.4 million Indian users. The move makes these remaining funds potentially unreachable in case of another hack, as ByBit operates outside Indian jurisdiction.
Insights from CoinSwitch CEO
The fund transfer to ByBit was disclosed by CoinSwitch CEO Ashish Singhal, who revealed that WazirX also transferred $1.5 million to KuCoin, which is FIU-registered. He provided a live dashboard of over 240,000 public wallet addresses disclosed by WazirX, following a Singapore Court order.
An internal audit by CoinSwitch indicated that WazirX made these transfers without user consent, further raising transparency and trust concerns.
What Lies Ahead for WazirX Users?
An industry insider noted that WazirX is struggling to find a suitable, FIU-registered exchange in India to securely hold user funds while a restructuring scheme is devised. In the meantime, users are left to rely on an unregistered exchange, increasing the risk of potential fund loss.
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