CoinDCX establishes Rs 50 crore crypto investors protection fund after WazirX breach

Indian crypto exchange CoinDCX has announced the establishment of the Crypto Investors Protection Fund (CIPF) with an allocation of Rs 50 crore.

According to the company, the fund is designed to compensate users for losses incurred in extremely rare scenarios, such as security breaches or other adverse events.

A governance framework for the credit and utilisation of the CIPF has been set up to ensure effective management and transparency, the release notes.

The launch follows Wazirx breach

The development comes weeks after the Indian crypto exchange WazirX suffered a major security data breach that resulted in the theft of close to $235 million in crypto assets.

Later, US-based Cyfirma identified that the North Korean hacker group Lazarus Group was behind this massive theft.

Since then, the company has been making efforts to recover the stolen assets, but it hasn't been successful so far. WazirX planned to socialise losses among users but later shelved this plan following the severe backlash from customers and the crypto community.

The company is now seeking a cash injection and is working with agencies to recover a portion of the customers’ lost funds.

'Security is our top priority': CoinDCX co-founder

“At CoinDCX, security is our top priority", said Sumit Gupta, Co-Founder of CoinDCX.

He said the company invests heavily in "top-notch" security practices and follows robust security measures to ensure our customers' assets are protected at all times.

"The assets under management at CoinDCX are diversified across multiple vaults ensuring an added layer of security," he said.

Gupta highlights the motivation behind setting the CIPF

Commenting on the motivation behind setting the CIPF, Sumit further said, "In an extremely rare event of a security breach or an adverse event, this dedicated fund will provide an additional layer of protection, ensuring that our customers' assets remain secure and intact.  We commit to adding 2% of brokerage income to the corpus and increasing the pool size over time."

"We will continue to monitor the fund’s size, maintaining the balance at a level adequate to safeguard our users’ assets. The CIPF will be one of its kind and a significant step towards building long-term trust in the Indian crypto ecosystem," he added.

Backing from global investors

Established in 2018, CoinDCX is backed by notable global investors, including Pantera, Steadview Capital, Kingsway, Polychain Capital, B Capital Group, Bain Capital Ventures, Cadenza, Draper Dragon, Republic, Kindred and Coinbase Ventures.

In August 2021, the crypto exchange joined the unicorn startup club after raising $90 million in a Series C funding round at a valuation of $1.1 billion.