Liminal Custody, the erstwhile security partner of WazirX crypto exchange, has claimed in a statement that the exchange management still has Rs 420 crores worth of user funds under the custody of Liminal, even three months after the Rs 2000 crore hack and a public fallout between the two.
Liminal has also accused WazirX management of running a misinformation campaign by squarely blaming them for the hack.
Liminal Custody has also criticized WazirX management for trying to allegedly confuse users and Singapore Court by releasing 240,000 public wallet addresses in their affidavit. Liminal Custody stated that WazirX had near $400 Million or Rs 3363 crore of user funds before the July 18 cyber hack.
Almost 45% user funds amounting to $234 Million or Rs 2000 crore were stolen in the cyber hack that occurred on a cold multi-sig wallet of WazirX under the security infrastructure of Liminal Custody.
“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,” read an official statement from Liminal Custody.
Speaking to The Crypto Times, a spokesperson for Liminal Custody said, “Rather than sharing a detailed post mortem, WazirX instead chose to eschew responsibility by publicly attributing 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 acknowledged that some of the user funds are still remaining with third party exchanges and old custodians, stating that his exchange is having difficulty in searching for an exchange that will accept all crypto tokens they have.
WazirX has found itself at the center of controversy once again as its ongoing Proof-of-Reserve (POR) process encounters delays. The company, currently working to finalize its POR, has faced criticism for transferring funds to third-party exchanges like Bybit that remain unregistered in India.
These actions have led to accusations of improper conduct, with some in the crypto community labeling the move as a potential case of money laundering.
In an official statement, the WazirX team acknowledged that funds had indeed been moved to certain exchanges but stressed that this was part of an interim solution.
According to the WazirX team, onboarding a custodian is a complex process, particularly because 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 within the cryptocurrency community have voiced their 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.
Also Read: WazirX Submitted Dubious Wallet Addresses to Singapore Court; Here’s Proof
