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Details of the Theft
WazirX hacked by a hacker group on July 18, 2024! According to the reports, $102.1 million worth of SHIB (Shiba Inu) tokens were stolen and sold off. The breach also includes the theft of other tokens as well, like Ether ($52.6 million), Matic ($11 million), and Pepe ($7.6 million). The stolen amount is almost 45 percent of WazirX’s total reserves as of June 2024, which is very concerning and makes it less likely that users will get their money back.
Wazirx Ethical Hacking team is continuously working. According to Lookonchain, WazirX has converted most of the stolen assets into 43,800 ETH, which is valued at $149.46 million. WazirX currently holds 59,097 ETH, worth $201.67 million. The hackers also transferred 7.7 million DENT tokens, worth $7,300, into a previously unused Binance account. To protect all users’ assets, all INR and crypto withdrawals have been temporarily paused until further notice. The incident of WazirX hacked highlights the urgent need for enhanced security measures in the crypto space.
Wazirx bounty program to restore stolen assets
Wazirx has announced the bounty of $23 million to get back the stolen assets on WazirX wallet. Nischal Shetty the Co-founder of WazirX has made it clear that the attack was not because of phishing but due to the multiple hacked wallets and signatories. Liminal the custody provider further added that the breach occured was due to the compromised WazirX machines.
Impact on Trading Volume
Compared to 2022, WazirX experienced a 90 percent decrease in trading volume in 2023 due to the imposition of a 30 percent tax on digital currencies and a 1 percent tax on every cryptocurrency transaction by the Government of India. However, as of June 10, 2024, WazirX reported total holdings of around ₹4,200 crores, reflecting a significant 79 percent increase since January 2023, with an almost 16 million user base. Recently, in June 2024, the exchange also published its proof of reserves.
Security breach
A blockchain analytics report from Elliptic states that the breach shows many signs of being performed by North Korean cyber attackers, who are known for turning stolen assets into Ether via various decentralized methods.
If we look at the security level of the WazirX wallet, it has been managed using Liminal’s digital asset custody and wallet infrastructure since February 2023. There are 6 signatories in the team to control the transactions. Of these 6 signatories, 5 are from WazirX and one is from Liminal. Even with such tight security, the breach is really shocking because it requires a lot of approval for the transaction.
Cause of the Cyber Attack
WazirX’s cybersecurity team revealed the preliminary findings that the cyber attack resulted from a discrepancy between the data displayed on Liminal’s interface and the actual transaction details. WazirX suspects that the attacker tampered with the system data in order to gain access to the wallet.
Acknowledgment of the Security Breach
WazirX stated that they have strong security measures to protect the transactions, including the Gnosis Safe multi-signature smart contract platform and Liminal’s whitelisting policy. However, they admitted that the hacker was able to penetrate these security layers, resulting in the WazirX hacked event. This admission is a hard pill to swallow, showing that even robust security systems can be hacked.
Disbelief in Crypto Community
Many people in the crypto community are doubtful of the explanation given by WazirX. A popular crypto YouTuber, Pankaj Tanwar, said on X (formerly Twitter) that even with 6 signatories to verify the transactions and 4 of them required to agree to the transaction, the wallet still got hacked. He expressed his view that this incident of a security breach will seriously reduce trust among the crypto community.
Broader Implications
If we look at the broader implications, this wazirx hacked security breach is seriously alarming not only for WazirX but for other platforms as well. It highlights the major risks associated with crypto trading and underscores the need for strong security measures. The government of India is also closely examining the crypto sector and will likely consider stricter regulations to mitigate these risks.
