Crypto exchange platform CoinDCX announced that the firm has allocated Rs 50 crore as part of its Crypto Investors Protection Fund (CIPF) to compensate users for losses incurred in security breaches. This comes days after crypto exchange WazirX faced a cyber theft leading to a loss of $230 million.
The company said that it would add 2 per cent of its brokerage income to this initial corpus, thereby increasing the size of the fund over a period of time.
CoinDCX has instituted the fund by allocating Rs 50 crore from its own cash reserves.
“The initial starting point, which is 50 crore, we have given it ourselves. We have used it from our balance sheet, our reserves. Now, whatever revenues we make, we are contributing two per cent of that brokerage income which would continue to add every month to this fund,” said Sumit Gupta, co-founder, CoinDCX, in an interaction with Business Standard.
He explained that the firm would re-evaluate the brokerage amount and the pool size of the fund every year.
“Every year we will re-evaluate if we should increase the two percent rate or not, or if we should increase the brokerage contribution or not,” he added.
CoinDCX is one of the first crypto exchanges in the country to introduce a customer compensation fund.
“This is the first of its kind where CoinDCX is taking that first step to earmark Rs 50 crore from our reserves and is dedicated only for customer funds’ protection. This will comfort investors that the company will compensate them in case of security breaches or other adverse events,” he noted.
However, Gupta clarified that the fund would not cover losses that individual investors may bear in case of lapses at the customer’s end such as password leaks, among others.
The announcement of the fund comes as crypto investors have raised concerns about the protection of their investments on Indian crypto exchanges after the WazirX heist.
Concerns also stem from WazirX’s initial decision to ‘socialise the losses’ or distribute the impact of the loss of funds across its customers.
“The first contribution to losses should ALWAYS come from the company (i.e. WazirX in this case) and the treasury and assets the company holds. I have not seen any such commitment around this from the company side, instead making customers directly absorb the 45 per cent losses is utter nonsense,” Gupta had previously tweeted on social media platform X (formerly Twitter).
First Published: Aug 07 2024 | 5:07 AM IST
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