In a bid to cultivate trust within the cryptosphere, Indian cryptocurrency exchange WazirX has unveiled its proof-of-reserves (PoR) report. This significant disclosure sheds light on how the exchange manages user assets, highlighting that more than 40% of their customers’ assets are currently being held on third-party exchanges. Released in an official statement on October 25, WazirX’s PoR initiative is designed to promote transparency and facilitate independent verification of its wallet addresses and asset holdings. As of October 24, the exchange was found to possess a total of $298.17 million distributed across approximately 242,000 wallets.
A deeper look into WazirX’s asset distribution reveals that of the total portfolio, around $157.01 million is maintained on-chain, while $126.91 million is allocated to external exchanges, with no assets under third-party custody. The significant portion of assets stored externally raises questions regarding liquidity and risk management, particularly in light of the recent cyberattack on the platform that resulted in considerable losses. WazirX did not disclose the identities of the third-party exchanges, referred to as “Exchange 1,” “Exchange 2,” and “Exchange 3,” leading to speculation within the crypto community about the potential involvement of exchanges like Bybit and KuCoin. Co-founder Nischal Shetty indicated that they are actively seeking permission from these exchanges to reveal their names, underscoring a commitment to transparency.
WazirX’s most valuable asset is a holding of 1,140 BTC, equating to approximately $77.9 million. The exchange also has a noteworthy amount in Tron-based cryptocurrencies, including $14.7 million in TRX and $1.6 million in Tether’s USDT stablecoin, collectively valued at $26.7 million. These figures provide not only insight into WazirX’s asset strategy but also hint at which cryptocurrencies attract significant interest from their user base. However, with more than $98 million placed in external exchanges, WazirX faces scrutiny regarding the safety and accessibility of these funds.
Commitment to Security and User Protection
In response to concerns about asset safety, WazirX has announced intentions to partner with a third-party custodian that offers fund insurance, emphasizing the importance of bolstering customer protection in an ever-evolving regulatory landscape. This commitment follows the fallout from a cyberattack in July, which severely impacted the exchange’s operations and led to the suspension of withdrawals. Although INR withdrawals have been reinstated, cryptocurrency withdrawals remain on hold as WazirX reviews its security protocols and strives to consolidate its reserves.
Collaboration with Regulatory Bodies
Amidst these tumultuous events, WazirX is proactively collaborating with the Financial Intelligence Unit and relevant government agencies to navigate the ongoing investigation related to the cyberattack. This cooperation aligns with their overarching goal of restoring user confidence and safeguarding digital assets. The exchange’s endeavors highlight a critical moment for WazirX as it seeks to regain trust in a market increasingly marred by security breaches and financial uncertainties.
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