A significant security breach at WazirX, the biggest cryptocurrency exchange in India, led to the theft of digital assets worth over $230 million. The incident, known as "WazirX Hit by Devastating Hack," occurred on July 18, 2024, and shocked the Indian cryptocurrency ecosystem. This breach has made people wonder if digital assets are truly secure.

Approximately 45% of the $500 million reserves of the exchange were stolen in the WazirX hack, making it one of the largest cryptocurrency robberies in recent years. The cyber attackers managed to get past Liminal's strong security measures, which included the Gnosis Safe multi-sig smart contract platform and its whitelisting policy and stole more than $230 million worth of digital assets.

The compromised wallet has been using Liminal's digital asset custody and wallet infrastructure since February 2023, per WazirX's preliminary analysis. To finish a transaction, the wallet needed permissions from six signatories, five from WazirX and one from Liminal, and a security rule that limited transfers to addresses that were pre-approved.

Details of the WazirX Hack

The attackers were able to take advantage of a discrepancy between the transaction's actual outcome and what was displayed on Liminal's interface, though. They got over the security protections by changing the transaction to take control of the wallet.

$102 million in Shiba Inus, $52.5 million in Ethereum, $11.24 million in Matic, $7.6 million in Pepe coin, $135 million in Tether, and $3.5 million in Gala were among the stolen coins. The hackers then used the decentralized exchange Uniswap to sell the assets they had stolen.

The attack, according to blockchain analytics company Elliptic, has characteristics of North Korean threat actors, particularly the Lazarus Group. The bitcoin industry has been the target of North Korean hackers before; the UN has documented 58 possible hacks by nation-state actors between 2017 and 2023 that may have brought in $3 billion in illicit proceeds.

WazirX has temporarily stopped INR and cryptocurrency withdrawals in response to the hack to protect any remaining assets. Along with promising to be open and honest with its consumers, the exchange has also vowed to update them on its investigation into the issue.

WazirX Hit by Devastating Hack
Image Source: Crypto Briefing

Users of other Indian cryptocurrency exchanges, like CoinSwitch and CoinDCX, have received assurances from them that their money is safe and untouched by the WazirX hack. But the event has once again brought attention to how important it is for the Bitcoin business to have strong security procedures.

Concerns concerning the Indian government's accountability have been highlighted by the government's decision to tax cryptocurrency gains, following security lapses such as the most recent WazirX hack. The government does not automatically bear responsibility for losses suffered by investors as a result of fraud or hacking, even though it has set up a framework for taxing the revenues from virtual digital assets (VDAs).

It is advised that investors use strong security procedures and hardware wallets as preventative steps to safeguard their investments. The imposition of taxes does not ensure that investments will be secure.

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