Crypto exchange WazirX is searching for a new custodian that can offer insurance for user funds, aiming to enhance security and minimize risk.

Indian cryptocurrency exchange WazirX is actively seeking a new custodian partner that can provide insurance for user funds, aiming to bolster security as it works to restructure operations following a major cyberattack in July.

In a blog post on Oct. 24, the exchange said it is trying to find a “custody provider who can offer insurance for the funds so that loss is minimized, even in worst-case scenarios.”

“While security is paramount, in this dynamic and new world of crypto, insurance will start playing an even more important role in custody services.”

WazirX

Additionally, WazirX launched a dual proof-of-reserves dashboard, developed in collaboration with CoinGabbar, a research marketplace, enabling users to independently verify wallet addresses and asset balances.

The platform’s efforts to rebuild trust come in the wake of a $235 million cyberattack in July, which prompted WazirX to collaborate with government agencies, including the Financial Intelligence Unit, to investigate the incident. As crypto.news reported earlier, the exchange has been cooperating with authorities, providing transaction trails and server logs to aid the investigation.

WazirX’s parent company, Zettai, has also engaged in discussions with potential partners to enhance user recoveries, exploring options like capital injections and profit-sharing arrangements. WazirX aims to return 52-55% of remaining crypto assets to clients within six months as part of its restructuring efforts, guided by a 10-member committee of creditors.

Indian police are investigating the “Datameer” crypto trading app, which allegedly duped at least 700 locals out of inr 10 million.

According to a local report, the scheme promised returns of up to 50% to unsuspecting investors who were told their funds were being invested in cryptocurrencies.

Once the investors transferred their money through the fake app, the app shut down, and the scammers disappeared. During the time it was active, the scam managed to dupe investors of more than inr 10 million (roughly $119,000).

India has witnessed a spike in crypto demand despite a lack of solid crypto regulations, and a punishing taxation regime, with the nation managing to claim the top spot in Chainalysis’ 2024 Global Crypto Adoption Index. However, this growing appetite for cryptocurrencies has opened doors for scammers who are exploiting the hype.

The Datameer app, which reportedly surfaced in April 2024 and was active for five months, managed to draw in both small and large investments, Superintendent of Police and Cyber Wing head, Pankaj Kumar Rasgania, noted.

“The scammers lured gullible individuals through social media, encouraging them to invest in a scheme with promises of huge returns in a short period of time,” he added.

Preliminary investigations suggest that the perpetrators behind the app are spread across the country, with some evidence pointing to connections in Hong Kong. Authorities are currently coordinating with cyber wing experts from police forces nationwide, and more information will be disclosed as the investigation progresses.

Scams such as these have raised concerns due to their potential international links, particularly to regions in China. Similar connections have previously surfaced in other cases investigated by Indian authorities.

Back in March, the Enforcement Directorate (ED) filed a charge sheet against 299 entities, including individuals of Chinese origin, under anti-money laundering laws. These entities were tied to a mobile app called “HPZ Token,” which allegedly duped investors with promises of high returns from cryptocurrency mining.

In another case, crypto scammers tricked a doctor in India into transferring over $35,000 in a drugs-in-parcel scam. Authorities found that the stolen funds were funneled through multiple bank accounts, swapped for cryptocurrencies, and transferred to accounts in China and Taiwan.