WazirX announced on Wednesday, March 12 that it has partnered with BitGo Trust Company for asset custody services. Headquartered in Palo Alto, California, BitGo offers services like asset custody, wallet management, staking, and trading out of regulated cold storages. As per WazirX, this partnership is aimed to enhance the security of its user assets. The development comes at a time when the Indian exchange is restructuring its finances to compensate its users after a hack last year that drained over $230 million (roughly Rs. 1,900 crore) from one of its wallets that was managed by Liminal Custody.
BitGo previously worked with other exchanges like Mt. Gox and FTX to secure assets and manage distributions to the creditors. As part of the partnership, WazirX will use BitGo’s institutional-grade infrastructure, multi-signature wallets, and up to $250 million (roughly Rs. 2,180 crore) in insurance in an attempt to earn back community trust.
Commenting on the development, WazirX co-founder Nischal Shetty said the exchange needs to rebuild its reputation in the market after suffering the hack in July 2024. In the last eight months since the incident, the exchange has faced strong criticism from its users for putting their assets at risk. In the aftermath of the attack, the exchange maintained that its internal systems were not compromised.
“By partnering with BitGo, we are taking a decisive step towards rebuilding confidence in WazirX. Their expertise will not only enhance the security of funds but also facilitate a transparent and efficient process for distributing funds to creditors,” Shetty said in a prepared statement.
As of now, BitGo has not commented on the development.
WazirX is currently preparing to present its decided restructuring scheme to its creditors on March 19. The creditors will get to vote on the proposal and only if 75 percent voters approve the scheme, it will go into effect. Creditors will get a chance to vote on the scheme between March 19 and March 28.
The scheme was designed by WazirX’s Singapore-based majority shareholding entity, Zettai and a financial restructuring firm, Kroll. The Scheme of Arrangement was cleared by the Singapore High Court in January.
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As of now, crypto buying, selling, and trading services at WazirX remain halted. A company spokesperson told Gadgets 360 that the platform may resume operations after May – if the proposed scheme is approved by the creditors. If the scheme is rejected, the exchange may have to consider liquidation – which could take up to at least three years to materialise.
Upon restarting operations, WazirX will keep user assets under the custody of BitGo.
“Users will benefit from a more secure and reliable trading experience backed by institutional-grade security measures,” Shetty noted.
On July 18, 2024, a multi-signature wallet belonging to WazirX, managed by Liminal Custody, was breached, resulting in losses exceeding $230 million (roughly Rs. 1,900 crore). At the time, Liminal Custody had denied any breach in its internal networks. Meanwhile, WazirX has held North Korea’s infamous Lazarus Group responsible for the hack.
