$235M WazirX Exchange Hack Has Implications For India’s Crypto Industry
Release: 2024/07/23 22:07 Reading: 255
WazirX Hack Raises Concerns about Exchange Security and India's Crypto Future
The massive $235M hack on the Indian cryptocurrency exchange WazirX on July 18 has raised serious questions about exchange security and the future of India's crypto industry.
The attack unfolded swiftly and precisely, with Web3 security firm Cyvers detecting "multiple suspicious transactions" involving WazirX's "Safe Multisig" wallet on Ethereum.
The assailant siphoned a staggering $234.9 million to a new address, with each transaction funded by assets from cryptocurrency mixer Tornado Cash. The stolen funds included cryptocurrencies like Tether (USDT), Pepe (PEPE), and Gala (GALA), which were swiftly converted into Ether (ETH) to conceal their trail.
WazirX's wallet also contained approximately $100 million in Shiba Inu (SHIB), $52 million in ETH, $11 million in Polygon's MATIC, and smaller amounts of other tokens.
In response, WazirX suspended withdrawals of cryptocurrencies and Indian rupees. The exchange announced it was "actively investigating the incident."
Impact on India's Crypto Sector
The hack has significant implications for India's cryptocurrency sector, which has flourished despite government pressure.
Utkarsh Tiwari, chief strategy officer for cryptocurrency exchange KoinBX, believes the security breach may cause concern among investors and exchanges. He predicts that Indian exchanges will invest in advanced security to demonstrate the resilience of the Indian digital asset market.
The crypto industry hopes for favorable changes in India's strict crypto tax regulations. Finance Minister Nirmala Sitharaman will present the Union Budget on July 23.
How the Attackers Gained Access to WazirX
While the exploited vulnerability remains unknown, Meir Dolev of Cyvers outlined the attack vector. The attacker used two addresses: one to initiate the transaction and the other to receive the funds. They funded the initiating address via Tornado Cash to pay gas fees.
Eight days before the attack, the hacker deployed a malicious contract that allowed them to change the implementation of the WazirX wallet. They used the signatures of WazirX and Liminal Custody to gain control, enabling transactions without further authorization.
Dolev speculates that the attacker likely compromised WazirX endpoints or laptops to obtain the necessary signatures, possibly via a UI hijack on Liminal's side.
Liminal Custody maintains that its platform remains secure.
North Korean Involvement Suspected
Analysts suspect North Korean hackers may be responsible for the incident. Elliptic and ZachXBT have cited behavioral patterns characteristic of North Korean actors. Lazarus Group, a North Korean criminal organization, has been linked to major crypto exploits.
Market Impact and WazirX's Response
The hack caused significant market turbulence, with the price of SHIB dropping 10% after over $100 million worth of tokens were stolen.
WazirX has taken swift action. It has filed a police complaint, contacted over 500 exchanges to block suspect addresses, and is cooperating with exchanges to aid recovery efforts.
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