Indian crypto exchange CoinSwitch has decided to file a lawsuit against WazirX to recover its funds trapped with the rival exchange hit by a $230 million theft last month.
The move comes as WazirX struggles to pay back money invested by its users, devising in the process a "socialised loss" strategy by distributing the loss across its entire user base.
In a statement on X on Wednesday, CoinSwitch said it has around Rs 81 crore ($9.65 million) worth of assets stuck on WazirX. This includes Rs 12.4 crore in INR, Rs 28.7 million in ERC20 tokens, and Rs 39.9 crore in other cryptocurrencies.
"We have attempted to be in regular touch with WazirX since the day of the incident, but have not been able to reach a solution to recover the funds that are stuck on their platform," CoinSwitch said in a long post.
WazirX on Wednesday said it had filed for a moratorium in Singapore High Court to facilitate restructuring of payments. The company has earlier revealed it plans to effect a scheme of arrangement, which entails allocation of assets proportionally among users as unsecured creditors.
CoinSwitch said the funds trapped on WazirX represent about 2 per cent of its total assets. Less than 1 per cent of its assets are affected by the alleged cyber attack, which primarily impacted ERC20 tokens.
CoinSwitch, backed by investors including a16z, Coinbase and Peak XV, said it is tapping its own treasury to maintain at least a 1:1 ratio for users' holdings on its platform. The company said its overall assets are 1.51x the user assets invested through its platform.
CoinSwitch said it maintains a small amount of its liquidity, about 7 per cent of its reserves, on third-party exchanges to ensure smooth trading for its users.
WazirX had last month said it would be able to return only 55 per cent of customer holdings while locking the remaining 45 per cent in USDT-equivalent tokens.
The firm's founder Nischal Shetty had also confirmed that the company had not insured customer funds.
In a statement on Friday, the company announced it will allow 66 per cent withdrawal of users' cash in INR in two phases – up to half between August 26 and September 8 and the remainder between September 9 and September 22.
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