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Proof of Reserves or Proof of Risks: WazirX Gambles with User Funds

Proof of Reserves or Proof of Risks: WazirX Gambles with User Funds

CryptotimesCryptotimes2024/10/25 23:22
By:Dishita MalvaniaVaibhav Jha

WazirX has put Rs 1067 crore of remaining user funds into unregistered foreign exchanges without taking users' permission.

WazirX management has published its long-awaited Proof of Reserves (PoR) of its available customer balance post the Rs 2000 crore hack. Acting on the directions of Singapore Court, the exchange management released funds bifurcation data which showed that at least Rs 1067 crore ($126.91 Million) of user funds have been sent to three different exchanges- Bybit, Kucoin and HTX, post the hack.

Out of the three exchanges, ByBit has Rs 824.03 crore ($98 Million), Kucoin has Rs 225.4 crore ($26.81 Million) and HTX has Rs 17.65 crore ($2.1 Million). It is imperative to note that out of the three exchanges- ByBit and HTX are not recognized by the Financial Intelligence Unit (FIU) – India and users’ funds are at risk, in case of another cyber attack on these two exchanges.

📢 Proof of Reserves is now live

In line with our commitment to transparency, you can now verify wallet addresses and review asset balances through our Proof of Reserves.

Click here 👉 https://t.co/Aivwy4nYCP

Note: A Proof of Reserves dashboard with dynamically updated data… pic.twitter.com/0yrg9zvrQT

— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) October 25, 2024
Source: X

WazirX had not informed its users before moving their funds to different exchanges. These findings have reignited concerns over crypto exchanges storing user funds outside their native jurisdiction, raising eyebrows over how funds are handled and safeguarded.

Notably, the top ten wallets reflect significant allocations across multiple cryptocurrencies: $77.39 million in Bitcoin (BTC), $26.65 million in TRON (TRX), $22.53 million in Binance Smart Chain (BSC) assets, $5.96 million in Ethereum (ETH), $2.52 million in XEC, $2.35 million in Polkadot (DOT) and others in smaller amounts like $2.52 million including Ethereum Classic (ETC) and  $2.05 million in Internet Computer Protocol (ICP). 

Meanwhile, Nischal took to X to claim that WazirX exchange is on its way to become the “most transparent exchange” and the PoR should end all speculations about crypto balances of the exchange.

POR: On our journey to becoming the most transparent exchange, we’re taking a major step forward.

This POR dashboard by WazirX is just the beginning. But you don’t have to rely on our word alone. Soon, Coingabbar, a trusted third-party platform, will also display the POR on…

— Nischal (Shardeum) 🔼 (@NischalShetty) October 25, 2024

Meanwhile, the statement by Nischal hardly had any soothing effect on users and crypto influencers as many questioned the decision to transfer user funds to foreign exchanges that are banned in India from operating.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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