In a significant development in the investigation into the $235 million hack of the WazirX cryptocurrency exchange, Delhi Police arrested a suspect from the Bengal region. The arrest marks a breakthrough in the ongoing probe into the breach, which has raised significant concerns about the security of crypto exchanges. The police charge sheet, which was shared with Cointelegraph, reveals new details regarding how the breach occurred and what steps were taken by authorities and the exchange to investigate the matter.
According to the charge sheet, the hack did not result from any internal vulnerabilities within WazirX’s systems. Instead, the breach was carried out through a fake account, which was sold via Telegram to a third party. This third-party buyer exploited the account to access WazirX’s multisignature wallet and withdraw crypto tokens, ultimately depleting the wallet of $235 million worth of digital assets.
The chargesheet elaborated that the hacker was part of a well-organized group of criminals who breached WazirX’s platform by using deceptive tactics, including the creation of fictitious accounts. It was disclosed that the individual arrested, whose identity has not been fully revealed, had been offered a “good amount” of money by a buyer of the fake crypto account via Telegram.
During the investigation, WazirX demonstrated a high level of cooperation with law enforcement by providing essential information for the inquiry. The exchange reportedly shared hardware, Know Your Customer (KYC) records, and transaction logs with the authorities, aiding in the investigation’s progress. This collaboration was critical in confirming that the breach did not originate from internal system vulnerabilities, validating WazirX’s security measures which had previously faced scrutiny following the hack.
The Indian Cyber Crime Coordination Centre (IFSO) independently reviewed the incident and concluded that WazirX’s internal systems remained secure, further validating the exchange’s claims about its security measures. This independent confirmation has provided reassurance to both investors and regulators that the breach was a result of external exploitation rather than systemic weaknesses within the exchange itself.
Issues with Third-Party Services
Despite the reassurances about WazirX’s internal security, the investigation has faced some setbacks. One of the main challenges has been delays in cooperation from third-party services that were responsible for managing the exchange’s digital assets. This lack of prompt collaboration has slowed down data collection and investigation efforts, making the process more difficult for authorities.
On October 22, Liminal Custody, WazirX’s digital custody partner, responded to accusations made by the exchange regarding the breach. In a public statement, Liminal Custody criticized WazirX for engaging in a “disinformation campaign” by blaming the digital custody provider for the hack. Liminal asserted that WazirX had retained over $175 million in assets on the platform 75 days after the breach, despite the exchange’s claims that Liminal was responsible for the loss.
In response to the accusations, a spokesperson for WazirX confirmed that the exchange was in the process of migrating the remaining assets from Liminal to new multisig wallets. This action is part of WazirX’s effort to secure its digital assets and regain control after the breach. The exchange’s spokesperson also indicated that the migration was an ongoing process, highlighting the steps being taken to prevent further incidents.
The investigation is still ongoing, and authorities are continuing to probe the involvement of other individuals in the hack. With the arrest of the primary suspect, law enforcement is hopeful that more details will emerge, leading to further arrests and the recovery of additional assets.
| Event | Date | Detail |
|---|---|---|
| Suspect Arrested | November 2024 | Suspect arrested from Bengal region, linked to $235M hack |
| Fake Account Sale via Telegram | June 2024 | Fake account exploited by third-party buyer |
| Hack Uncovered | August 2024 | $235M drained from WazirX multisignature wallet |
| WazirX Cooperation | October 2024 | Exchange provided hardware, KYC records, and transaction logs |
| Liminal Custody Response | October 22, 2024 | Liminal responds to accusations, stating that $175M remained on platform 75 days post-breach |
| WazirX Migration of Assets to New Wallets | October-November 2024 | WazirX begins migration to new multisig wallets |
The Importance of Robust Security Measures in Cryptocurrency Exchanges
The ongoing investigation into the $235 million hack of WazirX underscores the importance of maintaining robust security measures in the cryptocurrency space. As digital asset platforms become increasingly popular, they also attract malicious actors seeking to exploit vulnerabilities. This breach highlights the need for exchanges to invest in comprehensive security frameworks, conduct regular audits, and ensure timely cooperation with authorities when incidents occur. While WazirX has shown transparency and cooperation, the delays caused by third-party services demonstrate that exchanges must also prioritize securing their partnerships and ensuring quick responses during emergencies. The cryptocurrency industry is at a critical juncture, and strengthening its security protocols is essential to protect users and sustain confidence in these digital platforms.
Featured image credit: rawpixel via Freepik
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