India's largest crypto exchange absorbs $16 million loss from internal process failure tied to retired wallet
The Mumbai-based exchange initially dismissed reports of suspicious outflows as a false alarm. It now says it lost $16 million and will absorb the loss.
CoinDCX, India’s largest crypto exchange, says it has absorbed a $16 million loss after an internal process failed to move customer deposits out of a retired wallet.
It all started last week, when blockchain sleuths flagged about $16 million in suspicious outflows from wallets linked to the Mumbai-based exchange. CoinDCX was quick to dismiss the reports, with CEO Sumit Gupta calling it a false alarm on X.
A spokesperson told CoinDesk that the addresses cited by the sleuths were old ones, created in January 2025 and compromised in the July 2025 hack, which cost the exchange about $44 million, and that CoinDCX had not used them since. In essence, the exchange said the activity did not have any connection with CoinDCX. But ZachXBT, a well-known on-chain investigator, said at least one of those addresses, labeled TQKJQ, was in use by a liquidity provider and swept user deposits to CoinDCX’s current public hot wallet as recently as April and May 2026.
On Sunday, CoinDCX published a blog post on the activity tied to TQKJQ, saying the wallet belongs to its old operational wallet infrastructure and that the loss was tied to it.
“This wallet belongs to our old operational wallet infrastructure, which was compromised during the security incident we reported on July 19, 2025, and was deprecated as a result,” CoinDCX said.
The post explained that some users mistakenly continued to deposit funds into the deprecated, or retired, addresses even after the exchange deprecated them following the 2025 hack. CoinDCX credited those users’ portfolios the moment the funds reached the deprecated wallet. A secondary service, which the exchange calls sweeping, was meant to then move the funds from the deprecated address into the primary CoinDCX wallet.
However, that process failed for a particular period, causing deposits to accumulate in the deprecated address.
“This led to a loss of 15.99 million USDT which was absorbed by the company,” it said. The blog post does not call it a hack and does not say who was behind the irregular fund movement or how it happened. CoinDesk has reached out to CoinDCX to ask whether it means the old, retired addresses were hacked again.
CoinDCX said it noticed unusual activity in its systems on Oct. 21, and that its controls and immediate response measures prevented any impact to its active wallets and trading systems. The next day, it noticed irregular fund movement via the blockchain data and through reports from its user community. CoinDCX said customers’ crypto deposit balances are unaffected and fully accounted for.
“We want to reiterate that all user funds remain safe in secure, segregated cold wallets, protected by multi-layer custody and offline security controls,” the exchange said. Cold wallets are kept offline.
The exchange acknowledged that it took time to review the deprecated infrastructure.
“It took us some time to do the thorough review of the deprecated infrastructure and confirm the sequence of events. We could have been more proactive, but we shared this update as soon as we had the complete picture,” it said.
Diversified RWA stablecoins sustain 5-7% yield from real credit as crypto funding compresses to ~4%. GENIUS pushes yield off-chain; TAM grows to $4B in 3 years.
Asanat Analysis — Why it matters
A $16 million loss at India's largest crypto exchange—attributed to an internal process failure involving a retired wallet—represents a critical operational breakdown. The exchange's initial dismissal of suspicious activity as a 'false alarm' before absorbing the full loss highlights governance gaps common in centralized platforms: inadequate monitoring of legacy infrastructure, delayed incident response, and post-hoc loss absorption rather than proactive controls. This mirrors historical patterns from Mt. Gox to more recent exchange compromises where process failures (not just hacks) create material exposure.
The decision to absorb the loss internally, rather than socializing it across users or insurance, signals confidence in reserves but also suggests the exchange prioritizes reputation over transparency. For Indian crypto adoption—already constrained by regulatory ambiguity—this incident reinforces risks around operational maturity of domestic platforms and may accelerate user migration to international exchanges with more transparent incident disclosure and insurance frameworks. This matters as India represents one of the largest unbanked/underbanked populations globally, where institutional failures erode trust in crypto's core utility proposition.