WazirX, a prominent cryptocurrency exchange in India, has released its proof-of-reserves (PoR) report, revealing that over 40% of its customer assets are currently held on external exchanges. This disclosure was made on October 25, as stated in their official announcement.
Understanding WazirX’s Proof-of-Reserves
According to the most recent data from October 24, WazirX manages a total of $298.17 million across 242,000 wallets. The distribution of these assets is as follows:
- On-Chain Holdings: $157.01 million
- External Exchanges: $126.91 million
- Third-Party Custody: $0
- Less Liquid Assets: $14.25 million
The exchange has allocated significant amounts of funds to three unnamed third-party platforms, including:
- “Exchange 1”: $98 million
- “Exchange 2”: $26.81 million
- “Exchange 3”: $2.10 million
While WazirX has not disclosed the names of these exchanges, speculation in the crypto community suggests potential connections to Bybit, KuCoin, and Huobi. Co-founder Nischal Shetty mentioned:
“We’re actively reaching out to the three exchanges where funds are held, asking for permission to display their names. If granted, we’ll share them openly. If not, we respect their choice.”
Asset Distribution Insights
Within its holdings, WazirX’s most significant asset is 1,140 BTC, valued at approximately $77.9 million. Additionally, the exchange has:
- $26.7 million in various cryptocurrencies on the Tron blockchain
- $14.7 million in TRX
- $1.6 million in Tether’s USDT stablecoin
Plans for Enhanced Security Measures
WazirX is in the process of identifying a new third-party custodian capable of providing fund insurance to enhance user security. The exchange underscores the necessity of such insurance in managing risks associated with digital asset custody. The firm stated:
“We’re trying to find a custody provider who can offer insurance for the funds so that loss is minimized, even in worst-case scenarios.”
Background on Previous Security Issues
In August, WazirX ended its association with Liminal, the former third-party custody provider, due to a cybersecurity breach that led to a loss of $235 million in customer funds. Following this incident, WazirX temporarily suspended all cryptocurrency and Indian rupee (INR) withdrawals, although INR withdrawals have since resumed while cryptocurrency withdrawals are still on hold as they work to restore full access to user accounts.
Ongoing Recovery Efforts
In the wake of the cyberattack, WazirX is stepping up its efforts to recover lost assets and strengthen security measures. The exchange is collaborating with the Financial Intelligence Unit and other governmental entities in the ongoing investigation related to the breach.
