Liminal Custody, the former security partner of WazirX crypto exchange, has alleged that the exchange still holds Rs 420 crore of user funds under its custody, even after a three-month fallout following a Rs 2000 crore hack.
Liminal has also accused WazirX of a misinformation campaign, blaming them entirely for the hack.
Liminal criticized WazirX for confusing users and the Singapore Court by releasing 240,000 public wallet addresses in their affidavit. They stated that WazirX had nearly $400 million or Rs 3363 crore of user funds before the July 18 cyber hack. Almost 45% of these funds, amounting to $234 million or Rs 2000 crore, were stolen in the cyber hack of a cold multi-sig wallet under Liminal’s security.
According to Liminal, “Even 75 days after the hack, WazirX was still holding over USD 175 Million in assets on Liminal’s platform. In fact, as of today, USD 50 Million of their assets continue to remain on wallets accessed via Liminal Infrastructure.”
A spokesperson for Liminal told The Crypto Times, “Instead of sharing a detailed post-mortem, WazirX chose to publicly attribute blame to Liminal through a social media post mere hours after the breach – a post they later retracted. This impulsive finger-pointing, combined with their persistent lack of transparency and accountability, continues to not only muddy the waters but has also inflicted lasting damage to industry trust and security protocols.”
Meanwhile, WazirX co-founder Nischal Shetty admitted that some user funds remain with third-party exchanges and old custodians, stating that his exchange is struggling to find one that accepts all their crypto tokens.
WazirX Faces New Controversy Over Proof-of-Reserve Delays.
WazirX has found itself in the spotlight again due to delays in its Proof-of-Reserve (POR) process. The company, currently working to finalize its POR, has faced criticism for transferring funds to unregistered third-party exchanges like Bybit in India.
These actions have raised concerns of improper conduct, with some labeling the move as potential money laundering.
In an official statement, WazirX acknowledged the fund transfers but justified them as an interim solution. The company explained that onboarding a custodian is a complex process, especially given that many custodians don’t support all tokens. As a result, WazirX has opted to temporarily use third-party exchanges for custody until they find a more suitable alternative.
However, not everyone is convinced. Several prominent figures in the cryptocurrency community have expressed concerns, with one individual accusing WazirX of “daylight money laundering.”
Some have even suggested that the Enforcement Directorate (ED) could investigate the exchange based on these fund transfers to unregistered entities. Critics recall previous scrutiny from Indian authorities, and this latest development has reignited fears of legal action.
As the situation unfolds, WazirX will need to address both regulatory and community concerns to rebuild trust. Until the Proof-of-Reserve process is completed and all funds are securely managed under a custodian, the exchange remains in a challenging position, balancing between operational needs and public skepticism.