WazirX suffers security breach; digital assets worth $234 million swindled

WazirX confirmed the security breach on X. The firm has temporarily paused customer withdrawals

India’s largest crypto exchange WazirX suffered a major security breach on Thursday, losing $234 million worth of digital assets and forcing the exchange to suspend withdrawal till further notice.

The swindled amount is nearly half of WazirX’s total assets, and some crypto executives have cautioned investors against volatility in the market after the security breach.

The crypto platform confirmed the security breach on social media platform X.

“We’re aware that one of our ‘multisig’ wallets has experienced a security breach. Our team is actively investigating the incident. To ensure the safety of your assets, INR and crypto withdrawals will be temporarily paused,” the company said in a statement. 

 

A ‘mutlisig’ or multisignature wallet is a crypto wallet that requires two or more private keys to unlock and withdraw funds.

Liminal custody, one of the platforms servicing WazirX’s wallets, said its platform had not been a victim of the security breach. 

“Our preliminary investigations show that one of the self-custody multi-sig smart contract wallets created outside of the Liminal ecosystem has been compromised. We can confirm that Liminal’s platform is not breached and Liminal’s infrastructure, wallets and assets continue to remain safe,” the company said in a press statement. 

It added that all WazirX wallets created on the Liminal platform continue to remain secure and protected, and malicious transactions have occurred from outside of the platform.

The compromised amount after the attack on WazirX raises concerns since it amounts to nearly half of its total assets, data from its recent proof of reserves (PoR) report published June 2024 shows. 

A PoR report is the evidence that a financial entity has the holdings it claims to have.

A PoR audit is published by crypto firms to inform customers that a custodian or a crypto platform is adequately liquid, and users can withdraw their funds at any time. 

Crypto executives in the industry have cautioned investors against volatility in the market after the security breach at WazirX came to light. 

“We are aware of the recent security breach on the WazirX platform. We want to assure our users that their funds at CoinSwitch remain secure and unaffected by this incident. We advise all our crypto investors to be mindful of potential market volatility during this time and exercise caution in their trading and investment activities,” said Ashish Singhal, Co-founder CoinSwitch, another crypto exchange platform.

Sumit Gupta, co-founder and chief executive officer (CEO) at crypto exchange CoinDCX said users’ assets with the company remain safe. 

“In light of the recent #WazirX breach, we want to reassure all @CoinDCX users that your assets are safe and not impacted in anymanner. Our wallet security remains robust,” Gupta tweeted. 

The security breach comes months after the finance ministry issued show cause notices to nine offshore virtual digital assets (VDA) service providers dealing with crypto assets.

The Financial Intelligence Unit (FIU) under the finance ministry in December last year issued the show cause notices to VDA platforms like Binance, the largest cryptocurrency exchange, and Kucoin for non-compliance with anti-money laundering law and requested the Ministry of Electronics and Information Technology to block their websites.

Home grown crypto firms had said they were working to create a channel to ensure crypto investors who have their investments with offshore exchanges can be transferred to domestic platforms.