WazirX, India’s leading cryptocurrency exchange, has suffered a serious security breach, with hackers linked to North Korea successfully stealing $230 million worth of user assets. The incident had a significant impact on WazirX’s liquidity and token prices, with Bitcoin and SHIB trading on the exchange plunging by 30% each.
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Blockchain tracking agency Lookonchain disclosed the major security incident on Friday. The hackers have converted most of the stolen money into Ether (ETH), holding more than 59,097 ETH, worth about $200 million at current prices. In addition, the hackers also hold various alternative tokens worth $15 million. Usually, hackers convert stolen money into Ether and use the mixing service Tornado Cash to cover up transaction activities and facilitate money laundering.
Liquidity crisis and price crash
As a result of the breach, almost all tokens on WazirX are trading at a significant discount to their global and local prices, indicating severe illiquidity and huge selling pressure. In the past 24 hours, the Bitcoin/Rupee trading pair has fallen 22%, while the Shiba Inu/Rupee trading pair has fallen 30%. WazirX's own WRX token has plummeted 40% in the same period.
Meanwhile, WazirX’s trading volume surged to $8 million in the past 24 hours, compared to just $2.2 million on Wednesday. Clearly, the attack has had a profound impact on market sentiment and trading activity.
Security breaches and responses
WazirX’s multi-signature wallet suffered a security breach on Thursday, resulting in the theft of more than $100 million in Shiba Inu (SHIB) and $52 million in Ethereum, among other assets. The stolen funds account for more than 45% of WazirX’s total reserves listed in its June 2024 report, almost completely eliminating any hope of recovering user funds.
Although there were five signers from WazirX on the wallet, the exchange blamed the breach on a “mismatch” between the digital interface and the main crypto wallet. “During the cyberattack, the information displayed on the Liminal interface did not match the information actually signed, and we suspect the payload was replaced to transfer control of the wallet to the attacker,” WazirX explained in a post.
Community reactions and questions
The Indian crypto community expressed distrust of this explanation. Pankaj Tanwar, a well-known cryptocurrency YouTuber, said on the X platform: "There are 6 people there, and 4 people are needed to verify whether it has been hacked, and then blame each other. This mistake will cause unimaginable damage to the cryptocurrency market in India." Another Bitcoin podcast host @studybitcoin21 questioned the security and compliance of the exchange: "How can this be called good security? What is the compliance of the exchange?"
Currently, WazirX has temporarily suspended withdrawals of cryptocurrencies and fiat currencies. As the investigation deepens, users and investors expect the exchange to resume normal operations as soon as possible and take stronger security measures to prevent similar incidents from happening again.
This attack not only reveals the potential security vulnerabilities of cryptocurrency exchanges, but also triggers extensive discussions on exchange security standards and compliance. In the future, the cryptocurrency industry needs to invest more in security and user trust to cope with increasingly complex cyber threats.
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