Crypto exchange CoinDCX has established a $6 million contingency fund to protect customer assets amid challenges in the Indian crypto market following the $230 million WazirX hack.

The ‘Crypto Investors Protection Fund’ aims to compensate for user losses in the event of security breaches or other unforeseen circumstances that could jeopardize customer funds.

“This dedicated fund will provide an additional layer of protection, ensuring that our customers’ assets remain secure and intact,” said Sumit Gupta, co-founder of CoinDCX.

CoinDCX initially allocated 50 crores, approximately $6 million, to the fund. The company plans to increase the fund’s size by committing 2% of its brokerage income over time. Gupta mentioned that the fund will be continuously monitored and subject to annual reviews to ensure its viability.

Additionally, CoinDCX has established a governance framework to manage the fund’s credit and utilization while maintaining transparency.

The creation of the CIPF follows the recent WazirX hack, which resulted in the loss of over $230 million, affecting 45% of its customer assets. This incident left the exchange unable to maintain a 1:1 collateral.

Contingency funds like the CIPF are not uncommon in the cryptocurrency sector, which has faced numerous cyber attacks. Major crypto exchanges have established similar funds as a safeguard.

For example, Binance created the Secure Asset Fund for Users in 2018, allocating a portion of its trading fees to the fund. Similarly, crypto exchange HTX introduced a 20,000 BTC reserve fund in 2019, and OKX has a fund called Risk Shield, where it allocates a portion of its revenue.

Stay updated with the latest news and developments in the cryptocurrency world on Global Crypto News.

Post Views: 4