Liminal Custody, the former security partner of the WazirX cryptocurrency exchange, has asserted that WazirX still holds ₹420 crores worth of user funds under Liminal’s management, despite the significant fallout and a ₹2000 crore hack that occurred three months prior. The company has accused WazirX’s management of launching a misinformation campaign by blaming Liminal for the breach.
In its statement, Liminal Custody criticized WazirX for allegedly misleading users and the Singapore Court by disclosing 240,000 public wallet addresses in their affidavit. According to Liminal, WazirX initially managed nearly $400 million (around ₹3363 crores) in user assets before the cyber attack on July 18. The hack resulted in the theft of approximately 45% of the user funds, amounting to $234 million (₹2000 crores), from a cold multi-signature wallet secured by Liminal.
“Seventy-five days post-hack, WazirX was still holding over $175 million in assets on Liminal’s platform. Currently, $50 million of their assets remain accessible via Liminal’s infrastructure,” stated Liminal Custody in their official communication.
In an interview with The Crypto Times, a Liminal Custody spokesperson expressed frustration over WazirX’s actions, saying, “Instead of providing a thorough post-mortem analysis, WazirX chose to deflect blame onto Liminal through a social media post hours after the breach, which they later retracted. This impulsive finger-pointing, coupled with a lack of transparency and accountability, has muddied the waters and severely damaged trust in industry security protocols.”
Meanwhile, WazirX co-founder Nischal Shetty acknowledged that some user funds remain with previous custodians and third-party exchanges, complicating efforts to find an exchange willing to accept all of their crypto tokens.
WazirX is currently under scrutiny as its Proof-of-Reserve (PoR) process faces delays. The exchange has received criticism for transferring funds to third-party platforms like Bybit, which are unregistered in India. Such actions have led to allegations of improper conduct, with some members of the crypto community suggesting potential money laundering.
In response, the WazirX team confirmed the movement of funds to certain exchanges but clarified that this decision was part of a temporary solution. They emphasized that finding a custodian is a complex task, especially since many do not support all tokens. Consequently, WazirX has opted to utilize third-party exchanges for custody until a more suitable option is identified.
Despite WazirX’s explanations, skepticism remains. Several prominent figures in the cryptocurrency sector have raised alarms, with accusations of “daylight money laundering” directed at the exchange.
Critics have suggested that the Enforcement Directorate (ED) may need to investigate the exchange based on these fund transfers to unregistered entities, recalling previous scrutiny from Indian authorities. As the situation develops, WazirX faces the dual challenge of addressing regulatory concerns while trying to rebuild trust within the cryptocurrency community. Until the Proof-of-Reserve process is concluded and all funds are securely managed, WazirX remains in a precarious position, navigating operational necessities against public skepticism.
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