India’s leading cryptocurrency exchange, CoinDCX, recently suffered a security breach resulting in a loss of approximately $44.2 million (Rs 368 crore). While the company quickly reassured users that no customer assets were affected, the incident has reignited concerns over the security of crypto platforms and what more must be done to protect users in an increasingly hostile cyber environment.

What happened?

CoinDCX disclosed on Saturday that one of its internal operational accounts — used for liquidity provisioning on a partner exchange — was compromised following a “sophisticated server breach.” The company emphasized that the breach was limited to this internal wallet and did not impact user funds.“Today, one of our internal operational accounts — used only for liquidity provisioning on a partner exchange — was compromised due to a sophisticated server breach,” said Sumit Gupta, Co-founder and CEO, in a post on X. “I confirm that the CoinDCX wallets used to store customer assets are not impacted and are completely safe.”

The compromised account was isolated quickly, and CoinDCX stated that it would absorb the entire loss from its treasury, with no impact on customers.

Services remain stable, but questions linger

Despite the breach, CoinDCX said that trading and INR withdrawals continued without interruption. However, some users reported issues accessing their portfolios due to increased server traffic, which were later resolved.Meanwhile, blockchain analysts such as ZachXBT and cybersecurity firm Cyvers flagged the breach hours before the official announcement. The attacker reportedly transferred stablecoins (USDC and USDT) from Solana to Ethereum and used Tornado Cash to obscure the trail — a common tactic used to evade tracking.

Experts stress the need for stronger industry norms

The incident has raised concerns among industry experts, who say more robust, industry-wide security standards are critical.

“The CoinDCX incident is a sobering reminder that no platform is immune to evolving cyber threats,” said Aishwary Gupta, Global Head of Payments at Polygon Labs. “While it’s commendable that user funds remained safe, this highlights the urgent need for industry-wide adoption of real-time monitoring, rigorous smart contract audits, and transparent incident disclosures. Security and user trust must go hand-in-hand as we build the next generation of financial infrastructure.”

CoinDCX response and roadmap

In response to the attack, CoinDCX said it is working with external cybersecurity experts and the affected partner exchange to identify vulnerabilities and trace the stolen assets. Gupta also mentioned plans to launch a bug bounty program to detect system flaws before they can be exploited.

“Our internal security and operations teams have been working through the day along with leading cybersecurity partners to investigate the matter, patch any vulnerabilities, and trace the movement of funds,” Gupta added.

The company has not disclosed whether law enforcement or regulatory bodies have been engaged, but said updates will be shared with the community in real time.

Why this matters

This incident comes nearly a year after WazirX — another major Indian exchange — suffered a breach involving over $230 million. While WazirX paused withdrawals and faced criticism for delayed communication, CoinDCX’s decision to take full financial responsibility may set a new benchmark for user-first accountability.

The broader concern now is whether crypto platforms are equipped to match the pace of increasingly sophisticated cyber threats — and whether India’s regulatory framework can evolve quickly enough to safeguard retail investors.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)

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