One’s loss, another’s gain: Indian crypto exchanges race to woo WazirX users as market shakes up
While competitors rush in to woo WazirX users in a changing crypto landscape, the crypto exchange—reeling from a $234 million cyberattack—is now focused on one goal: rebuilding from the ground up.
Following a cyberattack in July 2024, crypto exchange WazirX is now gearing up to reopen its platform. The event has left its competitors racing to acquire its users, as the dynamics in the Indian crypto ecosystem shift for new opportunities.
CoinSwitch, earlier this month, launched a Rs 600 crore initiative—CoinSwitch Care—for users impacted by the alleged cyberattack that resulted in the theft of over $230 million worth of digital assets.
The crypto exchange platform aims to help affected users earn back their funds through signup rewards, revenue redistribution, and referral rewards. However, these rewards will start accruing only after WazirX reopens its platform.
In a series of queries sent to CoinSwitch about the move, the company said, “Signup and referral rewards start accruing immediately. However, the revenue redistribution reward will commence only after WazirX releases the funds.”
“The timing of revenue redistribution is crucial because we can accurately determine the total loss amount only once WazirX reopens and releases the affected funds. This ensures a fair and proportionate distribution among all impacted users,” added Balaji Srihari, Vice President at CoinSwitch.
The crypto market is presently seeing favourable times and increasing competition—and understandably so.
The price of Bitcoin crossed $100,000 for the very first time in early December, fueled by the re-election of Donald Trump as the US president, who has spoken in favour of the digital asset. He also runs his own cryptocurrency business–World Liberty Financial. Bitcoin was trading at $102,817 as of Wednesday, January 29 afternoon.
Meanwhile, as a rising number of foreign players aim to extend their crypto exchange services to users in the country, Indian players look to strengthen user confidence in digital assets and, in the process, bolster their user base.
The race towards the top
In the months following the WazirX cyberattack, CoinDCX Co-founder and CEO Sumit Gupta took to social media platform X to hint at a potential buyout of the company.
“We are closely following the developments and keep thinking of various options, including taking over WazirX and working towards funds recovery. However, the matter is currently sub judice, limiting our ability to take direct action until there is a clear decision from the Singapore courts,” the post read.
Gupta referred to the August 2024 proceedings, where Zettai Pte Ltd—the parent entity of Zanmai Labs, which operates WazirX in India—filed an application with the High Court of Singapore for a moratorium under Section 64 of the Insolvency, Restructuring and Dissolution Act, 2018.
Earlier this month, the Singapore HC approved the scheme, providing a breather to Zettai to restructure its liabilities to address users’ concerns about cryptocurrency balances and recovery.
Since hinting at a buyout, CoinDCX has now changed gears. The Mumbai-based company has been silent about the WazirX hack, and instead, announced a new initiative to develop India’s first homegrown custody solution, Bharat Custody, setting aside Rs 50 crore for research and development.
Gupta has since deleted the post adding that he did so “Because few thought of it as a marketing tactic to acquire WazirX users which was never the intent.”
CoinDCX refused to participate in the story.
To put the size of these exchanges into perspective, WazirX has over 16 million registered users, while CoinSwitch has over 20 million users. According to CoinDCX’s year-end report, the crypto exchange has over 14 million users.
Industry experts say the crypto community has welcomed CoinDCX’s Bharat Custody solution. “If the [WazirX] assets were in India, or if the companies were set up in India, there was a legal recourse around it. But because it's a Singapore company… I think I've had multiple conversations with the government officials there, and they've always wanted us to kind of have custodies in India,” says Aishwary Gupta, Global Head of Payments at Polygon Labs. Gupta has previously worked with Zebpay as its Treasury Manager.
Meanwhile, CoinSwitch is seeing a positive response to its CoinSwitch Care initiative. “Since the launch, over Rs 40 lakh worth of losses of users affected by the alleged cyberattack on WazirX have already been claimed through the CoinSwitch Cares programme,” says Srihari.
As market dynamics shift between the top crypto exchanges—with some focusing on rebuilding the trust in the asset, and others on expanding the user base—the crypto exchange, WazirX, who is in the middle of this shift, has decided to put its head down and focus on rebuilding its platform.
In response to queries sent by YourStory regarding steps taken by its competition, a WazirX spokesperson says, “Our goal is to get the voting process going ASAP and take the rebalancing of net liquid assets live for all users. We will do everything possible to expedite this for a speedy resolution. With creditors voting in favour of the scheme, it becomes effective. Within 10 business days of that, the initial distribution of funds will happen.”
As companies strategise, users stand to gain
The initiatives by CoinDCX and CoinSwitch aim to bring back confidence in the digital asset and are eventually meant to benefit users—be it enthusiasts who want to begin trading or those with their funds frozen on the WazirX platform.
“The efforts by CoinSwitch and CoinDCX to support WazirX users are noteworthy, especially the proactive approach of CoinSwitch with its Rs 600 crore recovery fund. While this initiative addresses user concerns and fosters goodwill, it also highlights the industry's collective commitment to strengthening the Indian crypto ecosystem,” says Himanshu Maradiya, Chairman and Founder of CIFDAQ, a digital currency trading platform.
“At CIFDAQ, we view such moves as an opportunity to learn and innovate further. Our focus remains on creating sustainable value for our users by prioritising transparency, user-centric services, and utmost security rather than short-term tactical gains. Strategic programs are only effective when they align with long-term trust and industry resilience,” Maradiya adds.
While WazirX’s reopening may prompt the company to assess opportunities to address market gaps, he points out that CIFDAQ will focus on its expansion for the time being.
On the changing competitive dynamics, Saravanan Pandian, Founder and CEO of crypto exchange KoinBX, says, “Re-opening of WazirX will definitely change the competitive dynamics within the Indian crypto ecosystem. The move is good for the market overall, which is growing and bouncing back. Yet, the industry has ways to go, and the regulatory environment remains dynamic.”
Pandian adds that KoinBX is upgrading its security, education offerings, and innovative features, such as speed of transaction and lower fees, to stay ahead of the curve.
According to WazirX’s scheme timeline calculator, the company is on track to reopen its platform and distribute funds on February 14, 2025. Meanwhile, it recently successfully froze the first tranche of assets worth $3 million USDT.
As WazirX looks to mark its comeback, the crypto exchange will have to navigate the crypto landscape’s newer shifting dynamics.
Edited by Suman Singh