What happened and the extent of crypto losses.
India’s largest cryptocurrency exchange, WazirX, experienced a significant security breach, resulting in the loss of over $230 million in various digital assets. The incident, which took place on Thursday, compromised one of WazirX’s multisig wallets and has raised substantial concerns within the crypto community.
Breakdown of the Stolen Assets
WazirX announced the breach in a statement on X (formerly Twitter).
According to Arkham Intelligence, the attacker stole around $102.1 million in Shiba Inu (SHIB) tokens, which have since been sold off. Additionally, Elliptic’s data revealed that $52.6 million in Ether (ETH), $11 million in Matic (MATIC), and $7.6 million in Pepe (PEPE) were also taken.
These stolen assets account for over 45% of WazirX’s total reserves as reported in June 2024, raising serious concerns about the recovery of user funds.
Current Status of the Stolen Funds
Lookonchain noted that the hacker converted most of the stolen assets into 43,800 ETH, valued at $149.46 million, and currently holds 59,097 ETH, worth approximately $201.67 million. The hacker also deposited 7.7 million DENT, valued at $7,300, into a previously unused Binance deposit address.
Approximately $15 million in assets remain, including 1.66 billion DENT worth $1.56 million, 6.76 million CHR worth $1.72 million, 78.6 million CELR worth $1.12 million, and 958,428 FRONT worth $909,000.
Understanding the Breach
Preliminary findings from WazirX suggest that the breach resulted from a discrepancy between the data displayed on Liminal’s interface and the actual transaction details. WazirX believes that the payload may have been manipulated to transfer control of the wallet to the attacker.
There is some skepticism within the Indian crypto community about this explanation. Pankaj Tanwar, a well-known crypto YouTuber, commented on X: “There are six people, needing four to verify, yet it still got hacked, and now there’s a blame game. This incident will harm crypto in India more than anyone can imagine.”
Security Measures and Breach Details
According to WazirX’s report, the compromised wallet was operated using Liminal’s digital asset custody and wallet infrastructure, in place since February 2023. The wallet was controlled by a multisig arrangement with six signatories: five from WazirX and one from Liminal.
To enhance security, a policy to whitelist destination addresses was implemented. Despite these measures, the hacker managed to bypass the Gnosis Safe multisig smart contract platform and Liminal’s whitelisting policy.
Conclusion
The WazirX hack underscores significant vulnerabilities even in highly secure systems and highlights the need for ongoing improvements in security practices within the cryptocurrency industry. As the investigation continues, efforts are focused on recovering the lost assets and bolstering defenses to prevent future breaches.
