WazirX suffers major security breach

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India’s largest crypto exchange, WazirX, disclosed a major security breach on July 18. The breach confirmed the theft of over $230 million (₹19.23+ billion) in digital assets, including Shiba Inu (SHIB), Ethereum (ETH), Matic tokens, and more. The theft has caused a sharp decline in the value of WazirX (WRX) tokens. The incident has raised grave concerns about regulations and security protocols in the rapidly evolving crypto landscape.

A blockchain analytics report from Elliptic states that the multi-signature wallet security breach shows all the signs of North Korean cyber attackers, who have been swapping assets for Ether using various decentralised services.

According to WazirX’s initial report, the compromised wallet has used Liminal’s digital asset custody and infrastructure since last year. The breach occurred due to an advanced cyberattack that exploited vulnerabilities in the security system and infrastructure. Liminal, however, has clarified that their system was not compromised.

Multi-signature (multisig) wallets need multiple private keys or signatories to approve transactions, which adds an extra layer of security to the system. However, hackers bypassed this security and gained unauthorised access to the wallet.

In response to the hacking, WazirX officially confirmed on X that their team is actively investigating the incident. To ensure the protection of user assets, all INR and crypto withdrawals are temporarily paused until further confirmation. Further, they also mentioned finding exploited smart contracts. The team is dedicated to resolving this issue and recovering the stolen funds. They have ensured transparency and updated their users about the situation's progress.

The exchange saw its trading volume decrease by 90 percent in 2023 compared to 2022 due to the Indian government implementing a 30 percent tax on digital currencies and 1 percent for every cryptocurrency transaction in 2022. However, as per the June 10, 2024 reports, WazirX reported a total holding of around ₹4,200 crores, indicating an impressive 79 percent surge since January 2023. With a use base of over 16 million, the exchange recently published its Proof of Reserves for June 2024.

The security breach is challenging for WazirX. Such high-profile hacks indicate the major risks of crypto trading and highlight the need for stringent security measures in the domain. The Indian government is still scrutinising the industry and considering more strict regulations and policies around crypto transactions.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist.
Twitter: @bhardwajshash