ET breaks down what happened and what it means for users.
Q: What exactly happened at CoinDCX?
A: In separate social media posts, cofounders Sumit Gupta and Neeraj Khandelwal said that the exchange experienced a server-side breach targeting an internal account used for liquidity provisioning, a process where the platform maintains crypto reserves to ensure smooth transactions for users. The hackers siphoned off $44 million worth of crypto assets in what the company described as a “sophisticated” attack.
Q: How did the company respond?
A: CoinDCX clarified that no customer funds were affected as user assets were stored separately in secure cold wallets. The company immediately isolated the compromised systems and temporarily suspended its Web3 services to contain the breach. INR deposits, withdrawals, and centralised trading remain fully operational. CoinDCX said it will absorb the entire loss from its own treasury.
Q: What is being done to recover the stolen funds?
A: CoinDCX’s internal security and operations teams are working with cybersecurity partners to investigate the breach, plug vulnerabilities, and trace the stolen assets. The company is also coordinating with a partner exchange to block and potentially recover the funds. In addition, CoinDCX plans to launch a bug bounty programme to strengthen its defences.
Q: How did users react?
A: The breach triggered widespread concern and panic among users, who flooded social media with queries about the safety of their funds. The sudden spike in traffic caused heavy load on CoinDCX’s servers, particularly those handling portfolio-related APIs. The company later said it had provisioned additional server capacity to address the issue.
Also Read: CoinDCX cyberattack: here’s what we know about the crypto hack so far
Q: What is CoinDCX and who are its investors?
CoinDCX is one of India’s largest cryptocurrency exchanges, founded in 2018 by Gupta and Khandelwal. It allows users to buy, sell, and trade a wide range of cryptocurrencies. The platform gained traction during the 2020–21 crypto boom and became India’s first crypto unicorn in August 2021 after raising $90 million in a round led by Facebook cofounder Eduardo Saverin’s B Capital. Other investors of CoinDCX include Coinbase Ventures, Polychain Capital, Jump Capital, Pantera Capital, Bain Capital Ventures, and Steadview Capital. It is currently valued at around $2.3 billion and has over 1.6 crore registered users.
Q: What services does CoinDCX offer?
CoinDCX provides a suite of products for both retail and institutional users. The CoinDCX app is built for beginners to easily invest in digital assets, while CoinDCX Pro caters to advanced traders with access to professional tools. The platform also introduced a Web3 mode within its app last year, giving users access to over 50,000 tokens. Additional offerings include CoinDCX Earn, which enables users to earn passive income on crypto holdings. It also has CoinDCX Ventures, a fund that backs early-stage Web3 and blockchain startups.
Q: Is this the first major hack involving an Indian crypto platform?
A: No. The WazirX hack in July 2024 remains the largest known cyberattack on an Indian crypto exchange. Hackers targeted one of its multi-signature (multisig) wallets, leading to losses of over $230 million, or nearly 45% of investor funds held on the platform. The attack was later linked to North Korea–affiliated groups, including the Lazarus Group.
Q: Where does the crypto industry stand in India in terms of regulations and legality?
A: The crypto industry in India exists in a legal, but largely unregulated space. While holding and trading cryptocurrencies is not banned, there is no overarching regulatory framework. The government has imposed a 30% tax on crypto income and a 1% tax deducted at source (TDS) on transactions involving virtual digital assets (VDAs), which dampened trading activity. The Reserve Bank of India remains critical of private cryptocurrencies, citing concerns over investor protection and financial stability. In 2023, the Financial Intelligence Unit (FIU) issued show-cause notices to nine offshore exchanges for failing to comply with anti-money laundering norms applicable under existing laws.
Q: What are some other recent major crypto hacks globally?
A: Earlier this year, Iran’s largest cryptocurrency exchange, Nobitex, lost over $90 million in a cyberattack amid rising geopolitical tensions between Israel and Iran. According to blockchain analytics firm Elliptic, the stolen funds were transferred to addresses bearing messages that criticised Iran’s Revolutionary Guard. In June, US-based crypto exchange Coinbase suffered a data breach that exposed customer information. Hackers used the stolen data to carry out social engineering attacks aimed at stealing user funds. They also demanded a $20 million ransom in exchange for not leaking the data and halting further attacks. The estimated financial impact ranged between $180 million and $400 million.
Q: What does this mean for crypto users in India?
A: The CoinDCX incident highlights the security risks in the crypto ecosystem, even as platforms adopt more mature safety infrastructure. While the company’s action of securing user funds and absorbing the losses is being viewed positively, the breach adds pressure on Indian crypto exchanges to strengthen security protocols and improve operational transparency.
Q: Why do hackers target crypto platforms? How do hackers use stolen funds?
A: Crypto platforms are lucrative targets because they handle large volumes of high-value digital assets, offer relative anonymity through blockchain transactions, and often have weaker security controls compared to traditional financial institutions. Once stolen, funds are typically laundered through crypto mixing services like Tornado Cash, which obscure transaction origins and destinations, making recovery difficult for investigators.
