The hacker who attacked the WazirX exchange, once the leading Indian crypto platform by trading volume, has laundered almost 95% of the $230 mln pilfered. According to crypto sources, there is only $6 million worth of ether remaining, and the rest has been spiked via Tornado Cash. This development is a black mark in the ongoing attempts to track down and recover the embezzled money.
WazirX Faces Uphill Battle in Fund Recovery
In July 2024, WazirX was hacked and lost $231 million in cryptocurrency, of which $100 million was invested in Shiba Inu, and $52 million was invested in ether. The building society’s own June report to the exchange stated that the stolen assets comprised more than 45 percent of its reserves, which put it in a very humiliating and vulnerable situation. However, WazirX has failed to get back the money with the same ease and has been under fire for response and communication during such a time of crisis.
Wazirx Hack
In this regard, the spokesperson for WazirX said, “firmly dedicated to regaining all the stolen funds and re-establishing the confidence of our audience.” The Maternal Cap: The tools used by the perpetrators were smart and hard to track, such as Tornado Cash. This is evident in the aspects that operate under the company that has been recently affected by the heist of the Indian cryptocurrency exchange.
Tornado Cash: A Double-Edged Sword
Tornado Cash is a privacy layer over crypto transactions, allowing their source and destination to be concealed. Although not unlawful per se, the service is used by multiple criminals as a favourite means for money laundering and asset washing. Investigating the stolen tokens’ flow, Arkham’s blockchain data shows that the hacker behind the WazirX theft has already used Tornado Cash to flow more than $50m worth of tokens in August only, with an increased activity in September.
The last movement was observed last Wednesday when 3,792 ETH, which is equivalent to about $10 million, was transferred from one wallet to another before passing through Tornado Cash. “Tornado Cash was used to facilitate the laundering of the stolen money, making tracking and recovering the funds much harder,” said a cybersecurity professional who was privy to the investigation. This complexity explains why emerging cryptocurrency fraud cases are difficult to stop by law enforcement and security teams.
Wazirx Hack
Tornado Cash developer Alexey Pertsev was convicted of money laundering at the beginning of May 2024 and given a 64-month prison sentence by a Dutch court. More questions have been asked, particularly concerning the regulation and supervision of such privacy tools. While they are genuine tools for enhancing privacy of users, they are also used by the black hats.
Binance Distances Itself Amid Controversy
Following the hack, Binance, who formerly had an ignoble association with WazirX, released a statement disowning the attack. WazirX later stated that Binance never influenced WazirX operations; Binance clarified its position after WazirX’s founder, Nischal Shetty, accused Binance of manipulation in August. This came at a time when Binance was under pressure to spell out its links to the troubled exchange.
‘Binance has no say in WazirX functioning, and we were not part of this security breach,’ reported a Binance spokesperson. The statement was also perhaps intended to save face for Binance, given that it came under pressure for its linkages to WazirX during the ordeal.
This Binance-WazirX conflict only intensifies the situation, which is already tremendously murky. As WazirX continues to be restructured in Singapore to deal with its liabilities and recover from the said blow, the future of the exchange is still unclear. Due to ambiguity, users and investors are confused about ownership and accountability of created content and financial risks.
Conclusion: A Cautionary Tale for the Crypto Community
The doge that came out when $230 million was stolen from WazirX is almost done, proving that laundering doesn’t just happen in traditional finance, either. Given that exchanges and regulators face difficulty because of highly evolved hackers, this event underlines the need for improved security features and increased regulatory efforts.
The forecast is very troublesome for WazirX, but the path to rebound will be steep and rigorous. The challenge that the exchange will need to address in order to regain both trust and equilibrium will be key to its fortunes. However, the rest of the cryptocurrency space needs to take something from this and avoid similar attacks, which require reliable protection and increased transparency. Keep following TheBITJournal for the latest crypto updates and developments.
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