BENGALURU: WazirX, which is the country's largest cryptocurrency exchange by volume, on Thursday paused INR and crypto withdrawals temporarily as it suffered a security breach. According to Web3 security firm Cyvers, $234.9 million of funds have been moved to a new address.
WazirX said it is aware that one of its multi-sig wallets has experienced a security breach. "Our team is actively investigating the incident," the crypto exchange said.
Crypto storage provider Liminal Custody in a statement said its preliminary investigations show that one of the self-custody multi-sig smart contract wallets created outside of the Liminal ecosystem has been compromised.
"We can confirm that Liminal’s platform is not breached and Liminal’s infrastructure, wallets and assets continue to remain safe. It is also pertinent to note that all WazirX wallets created on the Liminal platform continue to remain secure and protected. Meanwhile, all the malicious transactions to the attacker’s addresses have occurred from outside of the Liminal platform," the storage provider said.
Users have now questioned the safety of their funds on the exchange. This hack is a big blow to the country's crypto industry, which started showing signs of recovery only in recent times.
"Even though WazirX is our competitor in the Indian market, I am sad to know about the incident. It’s not good news for the Indian web3 ecosystem," said Neeraj Khandelwal, co-founder, CoinDCX.
Krishnendu Chatterjee, co-founder and CEO of A2Z Crypto, said, the Indian government should urgently look into regulating crypto, by separating the role of exchanges/VDAs from custodians.
"If most of the funds were kept under custody (with proper insurance), this kind of scenario might be averted as insurance providers will have covered for any hacks. Only with proper regulation, can investor protection be guaranteed," he said.
Edul Patel, CEO of Mudrex, pointed out this incident underscores the importance of continuous monitoring and robust compliance frameworks to protect investors and ensure the integrity of the crypto ecosystem.
As of June 10, 2024, at 6:30 PM, WazirX's total holdings stood at Rs 4,203.88 crore, which is a 79% surge compared to January 2023. WazirX, which has over 16 million users, released Proof of Reserves for June 2024 recently and said it is facilitating transactions across over 350 cryptocurrencies and 700 market pairs.
A report from blockchain research firm TRM's threat intelligence shows that by June 24, 2024, hackers stole $1.38 billion compared to $657 million this time last year.
In May, Japanese cryptocurrency exchange DMM Bitcoin suffered the largest attack so far in 2024. It resulted in the theft of over 4,500 BTC, valued at over $300 million at the time, the report said.
