The decision was taken following the $230 million hack last month that caused a major shakeup in India’s crypto exchange market.

This major security breach suffered by the WazirX exchange had wide repercussions in the industry and started an important discussion about how other exchanges could take precautions against similar events.

In this context, CoinDCX decided to contribute to these discussions by establishing an investor protection fund to protect its users.

Sumit Gupta, co-founder of India-based CoinDCX, explained in detail the purpose of the investor protection fund established by his company and how it will work. Gupta stated that the fund is designed to compensate users for losses suffered in “extremely rare scenarios such as security breaches.”

He stated that the fund will initially be worth around $6 million (INR 50 crore) and that this amount will be covered solely from “company profits”.

The decision came after the major hacking incident that WazirX experienced last month. This occurred when a single wallet containing almost 45% of the exchange’s customer funds was targeted.

While the security breach sparked widespread concern in the crypto community, Gupta was among the first to criticize WazirX’s interim plan to manage customer funds post-hack. Gupta argued that the plan proposed by WazirX was insufficient and that other exchanges in the industry should develop more effective security measures.

Gupta explained why the investor protection fund was established and how it will be financed as follows: “This fund covers approximately 1.8% of the approximately $350 million in customer funds we have, and we plan to increase it over time. We will contribute to this fund with 2% of our monthly commission income. We intend to start somewhere and then re-evaluate this figure. “International stock exchanges use such funds, but in India we want to lead in this regard and make it a standard.”

Last month, WazirX founder Nischal Shetty stated in an interview with CoinDCX that the WazirX hack was rare and perhaps the first of its kind.

Gupta emphasized that the establishment of CoinDCX’s investor protection fund is not related to the concern that the rare events experienced in WazirX may also occur in CoinDCX.

“No one can guarantee 100% security. But how can we ensure customers are protected if there is even the slightest possibility of a breach? In our case, our funds are not concentrated in a single wallet, they are diversified. “This is another step we take in this regard.” he said.

These statements reveal CoinDCX’s commitment to improving investor security and raising standards in the industry. The establishment of the fund could be an incentive for other exchanges in the industry to review their security measures and strengthen their user protection strategies.