TLDR
- CoinDCX, an Indian crypto exchange, has established a Crypto Investors Protection Fund (CIPF) with an initial allocation of about $6 million.
- The fund aims to compensate users for losses due to security breaches or other adverse events.
- CoinDCX will contribute 2% of its monthly brokerage income to the fund.
- This decision comes after a $230 million hack on WazirX, another Indian crypto exchange, last month.
- CoinDCX recently acquired BitOasis, expanding into the Middle East and North Africa market.
In a move to enhance security for crypto users in India, CoinDCX, a leading cryptocurrency exchange, has introduced a Crypto Investors Protection Fund (CIPF).
This initiative comes in the wake of a significant security breach at another Indian crypto exchange, WazirX, which lost $230 million to hackers last month.
The CIPF, launched with an initial allocation of 50 crore rupees (approximately $6 million), is designed to compensate users for losses incurred in rare scenarios such as security breaches or other adverse events.
Sumit Gupta, co-founder of CoinDCX, explained that the fund currently represents about 1.8% of the $350 million in customer funds held by the exchange.
To ensure the fund’s growth, CoinDCX has committed to contributing 2% of its monthly brokerage income to the CIPF. Gupta stated,
“The thought was to start somewhere and then continue to reevaluate this number moving forward. International exchanges have done this. But in India, we want to at least take the lead and start this as a standard.”
The creation of this fund is part of CoinDCX’s broader strategy to implement robust security measures. Gupta highlighted the exchange’s “comprehensive, multi-layered security strategy,” which includes industry-standard practices such as multiparty computation (MPC), two-factor authentication (2FA), and advanced encryption to protect user data and assets.
While Gupta denied that the fund’s creation was a direct response to the WazirX hack, he acknowledged that no exchange can guarantee 100% security.
“But how do we ensure customers remain protected even if there is the slightest chance of a breach? In our case, we don’t concentrate our funds in one wallet, it’s diversified. This is another step in that direction,” he explained.
The WazirX hack, which occurred last month, resulted in the loss of nearly 45% of customer funds stored in a single wallet. Following the incident, Gupta was among the first to critique WazirX’s proposed plan to manage customer funds.
In addition to bolstering security measures, CoinDCX has been expanding its market presence. On July 3, the company acquired BitOasis, a virtual asset trading platform with a significant presence in the Middle East and North Africa (MENA) region.
This acquisition marks CoinDCX’s first entry into the MENA market and is expected to improve the user experience on both platforms by broadening product offerings and increasing trading and token range options.
The recent events have sparked discussions about the future of crypto and exchange security in India. Utkarsh Tiwari, chief strategy officer for Indian crypto exchange KoinBX, predicted that Indian digital asset exchanges would likely invest more in security infrastructure to protect the Indian digital asset market and community.
