On July 18, 2024, WazirX, India’s largest cryptocurrency exchange, faced a major security breach resulting in the theft of $230 million. This incident has caused significant concern in the crypto community. This blog explores the details of the WazirX hack, the immediate response from WazirX and other industry players, and essential steps to protect your assets.
Incident Overview
WazirX, a prominent player in the Indian crypto market, temporarily halted INR and crypto withdrawals after detecting a suspicious transfer of assets from one of its multisig wallets. A multisig wallet requires multiple private keys to authorize transactions, adding a layer of security.
In a post on X (formerly Twitter), WazirX stated, “We’re aware that one of our multisig wallets has experienced a security breach. Our team is actively investigating the incident. To ensure the safety of your assets, INR and crypto withdrawals will be temporarily paused. Thank you for your patience and understanding. We’ll keep you posted with further updates.”
Details of the Stolen Assets
According to blockchain analytics tool Lookonchain, the stolen assets included:
- $102 million worth of Shiba Inu (SHIB)
- $52.5 million in Ethereum (ETH)
- $11.24 million in Matic (MATIC)
- $7.6 million in Pepe coin (PEPE)
- $135 million in Tether (USDT)
- $3.5 million in Gala (GALA)
These figures highlight the significant impact of the breach, particularly given WazirX’s reported holdings of approximately $500 million in its June proof-of-reserves disclosure. The loss of nearly half its reserves underscores the severity of the incident.
Technical Aspects of the Breach
WazirX provided an in-depth explanation of the breach, focusing on the configuration and mechanics of the compromised wallet. The affected wallet, which utilized Liminal’s digital asset custody and wallet infrastructure, had six signatories: five from WazirX and one from Liminal. Transactions required approval from three WazirX signatories, all using Ledger Hardware Wallets, and a final approval from Liminal’s signatory. A policy to whitelist destination addresses was also in place to enhance security.
The breach stemmed from a discrepancy between the data displayed on Liminal’s interface and the actual transaction contents. During the attack, there was a mismatch between what was displayed and what was signed, suggesting that the payload was replaced to transfer wallet control to the attacker.
Immediate Response and Security Measures
WazirX emphasized that despite robust security measures, including the Gnosis Safe multisig smart contract platform and Liminal’s whitelisting policy, the attackers managed to exploit vulnerabilities. The company described the incident as a force majeure event, beyond their control, but assured users that efforts to locate and recover the funds were underway. They had already blocked certain deposits and contacted concerned wallets for recovery.
The statement continued, “While these are our findings from our preliminary investigation, we will keep you posted with further updates. Together with your support, we shall overcome this challenge and emerge stronger and more resilient than ever.”
Industry Reactions
The hack has prompted reactions from other major players in the Indian crypto market. Ashish Singhal, co-founder of CoinSwitch, reassured users, “We are aware of the recent security breach on the WazirX platform. We want to assure our users that their funds on CoinSwitch are secure and unaffected by this incident. We advise all our crypto investors to be mindful of potential market volatility during this time and exercise caution in their trading and investment activities.”
Similarly, Sumit Gupta, co-founder of CoinDCX, stated, “In light of the recent WazirX breach, we want to reassure all CoinDCX users that your assets are safe and not impacted in any manner. Our wallet security remains robust.”
Edul Patel, CEO of Mudrex, added, “We conduct regular audits to ensure a 1:1 ratio of funds. Additionally, our codebase goes through extensive scrutiny and review at many layers to ensure our tech infrastructure is immune to such exploits.”
Broader Market Impact
The WazirX hack has significant implications for the broader crypto market, particularly in India. The incident not only highlights the vulnerabilities in even the most secure systems but also underscores the need for continuous vigilance and improvement in security protocols. Crypto investors are advised to exercise caution, particularly during periods of market volatility, and to take proactive steps to secure their assets.
Steps for Users to Secure Their Assets
In light of the WazirX hack, here are some essential tips for crypto investors to protect their assets:
- Use Hardware Wallets: Storing your crypto in hardware wallets adds an extra layer of security compared to software wallets.
- Enable Two-Factor Authentication (2FA): Ensure that 2FA is enabled for all your crypto accounts to provide an additional security layer.
- Regular Audits: Regularly audit your holdings and transactions to detect any suspicious activity early.
- Stay Informed: Keep up-to-date with the latest security practices and news in the crypto world.
- Diversify Holdings: Avoid storing all your assets on a single platform. Diversify across multiple exchanges and wallets.
Conclusion
The WazirX hack highlights the risks in the crypto market. Despite the breach’s severity, WazirX swift response and ongoing security enhancements show a strong commitment to protection. By staying informed and adopting proactive security measures, crypto investors can safeguard their assets. The incident underscores the need for robust security and vigilance, with the crypto community working together for a safer future.
Feel free to share this guide with others who might benefit from these insights and tips. Staying informed and prepared is the best defense against the ever-evolving landscape of cryptocurrency security.
