WazirX, the largest crypto exchange in India, is facing it off with Liminal, the exchange’s digital custody partner. This dispute is based on the $235 million loss from a hack in July 2024. As the two point fingers and trade accusations, the incident has shocked the crypto community with the actions of the two entities.
Serious questions regarding the accusations have also arisen. Users want answers to the following questions: What caused the breach? Who is responsible for the hack? Where did the stolen funds go? However, these questions remain unanswered amidst the dispute.
What’s Causing the Blame Game?
The WazirX vs. Liminal dispute began after WazirX accused Liminal of being at fault for the cyber attack that led to user funds losses totaling up to $235 million. In a recent post on their official blog, Liminal exclusively denied being accountable for the hack. Liminal has also termed the accusations a “disinformation campaign,” which WazirX uses to confuse users and legal authorities.
Liminal has further emphasized that WazirX took to social media on 14 August 2024 to announce that the exchange had terminated its contract with Liminal. However, the exchange still uses Liminal’s infrastructure to manage access to the remaining users’ funds.
The custody firm has further stated that it does not have the power to control any transactions involving WazirX. This means only the WazirX team can authorize and make any transactions.
Is WazirX Been Misleading Users?
The accusations between WazirX and Liminal have heightened further questions about whether the exchange is trying to mislead users. This has led to Liminal declaring that the 240,000 wallet addresses issued by WazirX during the debt restructuring supervised by the court were used to mislead users.
Liminal argues that the majority of the wallets were hot wallets. A handful of the wallets were warm or cold wallets managed via the Liminal platform. The warm/cold wallets held approximately $300 million for several days. Additionally, WazirX held approximately $177 million in warm/cold wallets several months after the attack.
Controversy Over Transfers of Funds
WazirX has been accused of secretly transferring $72 million in cryptocurrency to Bybit and KuCoin. However, CEO Nischal Shetty took to social media to defend the transfers, saying that they were necessary for custodian switching.
These transfers have raised transparency issues among users. According to some, the transfers are very skeptical, and their concern is whether adequate disclosures were made.
Fact-finding is still a contentious issue between WazirX and Liminal, and the key aspects of the security breach are still blurred. Millions of dollars are still missing without explanation, and users are frustrated.
The dispute has highlighted just how confidence and security matter in the fast-growing crypto sector. The situation, which is still ongoing, points to possible perils linked to poor communications within an industry that’s in overdrive.
