Cryptocurrency Security: Force Majeure or Failure to Secure?
The recent cyberattack on WazirX, a leading Indian cryptocurrency exchange, has raised serious concerns about the security of crypto platforms. While the exchange claims that the attack was a “force majeure” event, many argue that this is not an acceptable excuse for losing user funds.
Force Majeure: A Convenient Escape Clause?
The term “force majeure” refers to an event beyond a party’s reasonable control, such as natural disasters or acts of war. Crypto platforms are increasingly using this clause to avoid liability in cases of cyberattacks.
However, legal experts argue that a cyberattack should not automatically qualify as “force majeure.” Platforms have a fiduciary duty to implement robust security measures to protect their users’ assets.
- If a platform fails to take reasonable security precautions, such as implementing multi-factor authentication and regularly auditing its systems, it may be held liable for losses resulting from a cyberattack.
Regulatory Void
The lack of clear regulations surrounding cryptocurrency in India creates a challenging environment for security and consumer protection. While the government has levied taxes on crypto transactions, it has not yet established a framework for cybersecurity standards.
The incident at WazirX highlights the urgent need for regulation in the crypto space. Clear cybersecurity guidelines and enforcement mechanisms would provide greater protection for users and help prevent similar breaches in the future.
