The WazirX Hack: A Tangled Web of Blame and Recovery Efforts
In a dramatic turn of events that has gripped the crypto community, over $230 million was stolen from the India-based cryptocurrency exchange WazirX, leaving the platform and its custody provider, Liminal, entangled in a blame game with no clear resolution in sight.
Blame Game Between WazirX and Liminal
Following the breach, both WazirX and Liminal have been quick to deflect responsibility. The slow pace of internal investigations has only compounded the uncertainty surrounding the recovery of the stolen funds. In a recent development, rival exchange CoinSwitch has initiated legal action against WazirX to recover approximately $6.2 million, representing 2% of its funds.
In response to the escalating situation, WazirX sought a 30-day extension for its internal investigation through a moratorium application. However, this move garnered minimal support from its user base, with only 441 users backing the appeal.
Independent Audits Yield Mixed Results
To clear its name, Liminal underwent an independent audit by Grant Thornton, which found no evidence of compromise in Liminal’s digital infrastructure. Concurrently, WazirX enlisted Google subsidiary Mandiant to investigate potential compromises in its systems. Mandiant’s findings echoed those of Grant Thornton, indicating no direct compromise of WazirX’s systems.
Bartosz Barwikowski, a security expert from blockchain auditing firm Hacken, suggested that the details of the attack might be withheld due to ongoing criminal investigations or the possibility that the attacker left no traceable footprint in the system.
Yongjin Kim, CEO of Asian derivatives trading platform Flipster, speculated that the attack could involve manipulation during the signing process, highlighting the need for additional security layers beyond multisignature policies.
Binance Denies Acquisition Claims
In the aftermath of the hack, WazirX claimed that Binance was financially accountable for repaying its creditors, citing a supposed acquisition. Binance refuted these claims, clarifying that while a contract was signed, the transaction was never completed, and it never controlled WazirX’s operations.
Binance emphasized that WazirX is owned by Zanmai Labs, registered with the Indian Financial Intelligence Unit, and highlighted the misleading statements by WazirX’s team regarding their relationship.
Continued Movement of Stolen Funds
Amidst these recovery efforts, significant amounts of the stolen funds continue to be transferred by the hacker. Recent asset data tracked by Arkham showed that over 5,000 Ether (ETH), worth approximately $11.6 million, was moved to a new address. Part of these funds, around $1.2 million, was sent to the crypto mixing platform Tornado Cash, complicating the traceability of the stolen assets.
The hacker’s main address still holds over $72 million in various tokens, predominantly in ETH, posing ongoing challenges to recovery efforts.
As the situation unfolds, the crypto community remains on edge, watching closely how WazirX navigates these turbulent waters. The incident not only highlights the vulnerabilities faced by crypto exchanges but also the intricate challenges involved in digital asset recovery.
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