Almost one year after $234.9 million was lost to a hack at WazirX on July 18, 2024, another crypto exchange CoinDCX has encountered a massive hack leading to loss of $44 million.
This has reportedly given a considerable setback to the new-age investors, some of whom had pinned their hopes on earning good returns amid skyrocketing crypto prices. In the past one month alone, bitcoin prices have risen by around 14 percent to touch $1,18,000.
Meanwhile, CoinDCX’s Sumit Gupta – after the hack — wrote on X that customers’ funds are 100 percent safe as all user assets are stored in segregated cold wallets. The company further claimed that its reserves are absorbing all losses.
After the news spread in the market, the exchange received a huge number of withdrawal requests. In just one day, this crypto exchange received 31,462 requests — out of which 98.09 percent (30,862) requests have already been processed and the remaining are set to be done in the next three days, Gupta wrote on the micro-blogging site.
Most investors wrote positive comments on Gupta’s post where he gave an update about INR withdrawals, whereas a few investors expressed discontent for having to exit their position during a bull run such as the post embedded here.
Trace the funds and get 25 per cent
CoinDCX on Monday also announced its recovery bounty programme wherein it said that 25 percent of any recovered funds will be rewarded to individuals who can help trace and retrieve the stolen crypto.
“The exposure was from our own reserves, and we have already absorbed it through our corporate treasury. More than recovering the stolen funds, what is important for us is to identify and catch the attackers because such things should not happen again,” wrote Sumit Gupta, co-founder, Coin DCX on X platform.
Should investors be worried?
Industry experts believe that these incidents should not shake the faith of investors in the asset class per se.
“Crypto is a fast-growing asset class and choosing how to hold it via self-custody or centralised exchanges (CEXs), is crucial. While self-custody offers control, it also carries higher risks such as key mismanagement or phishing. For investors, the question is not whether it is safe, but it should be whether I am investing through platforms which take safety seriously,” says Edul Patel, CEO and Co-founder of Mudrex.
“Exchanges are becoming more secure and accountable. Platforms such as ByBit and CoinDCX which recently suffered incidents, have shown this by shielding users from losses using internal treasuries, protection funds and distribution of user assets across multiple cold and hot wallets, adds Patel.
Some wealth advisors, meanwhile, have a different take on this.
“Some investors want to try new and fancy financial products, and it may lead to investing in unregulated products that carry huge risk. Cryptocurrency is one such product. Its value can change constantly and dramatically at any point in time. If the value goes down, there’s no guarantee that it will rise again and that’s why an unstable investment due to high investor losses from scams, hacks, bugs, and volatility in the recent couple of years,” says Preeti Zende, a Sebi-registered investment advisor and founder of Apna Dhan Financial Services.
“So, it is better not to burn fingers in such risky and unregulated products and stick with old, trusted products for wealth creation. To achieve long-term sustainable wealth in the long run, investors require a simple investment strategy,” she adds.
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