Yesterday, a friend of mine called me in a state of shock and panic, asking how he would recover the money he had invested in it. I was initially unaware of the situation he was referring to. He explained that there had been a security breach at WazirX. While he had only around Rs.10-15,000 affected, every rupee counts for a middle-class person like him.
Many investors are facing much larger sums of money being stuck. What could be the potential implications for these investors following such a security breach?
Investors outlook
Cryptocurrencies operate without centralized regulation in India, leaving investors vulnerable in disputes. With WazirX temporarily halted post-security breach, investor confidence in cryptocurrency investments may wane. Those still considering crypto investments might opt for safer platforms like CoinDCX or BitBNS. While WazirX had government approval, traditional investments like mutual funds and stocks offer more established protections for investors.
The background
In a significant blow to India’s cryptocurrency community yesterday, WazirX, a leading crypto exchange, has temporarily halted INR and crypto withdrawals following a major security breach. The incident, which is being hailed as the biggest cyberattack on an Indian exchange, saw hackers siphon off more than $230 million worth of investor holdings, nearly half of WazirX’s estimated reserves.
The breach was linked to a suspicious transfer of assets from one of WazirX’s multisig wallets, a type of crypto wallet that requires multiple private keys to authorize transactions. Blockchain analytics firm Lookonchain reported that the stolen assets included $102 million in Shiba Inu, $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.
WazirX confirmed the cyberattack, disclosing that it occurred within one of its multisig wallets, which had been utilizing the services of Liminal Custody, a digital asset custody and wallet infrastructure provider, since February 2023.
WazirX has temporarily paused all INR and crypto withdrawals to prevent further losses and secure its platform. Despite the incident, Liminal Custody maintained that no breach had occurred within its ecosystem, implying the attack might have exploited vulnerabilities elsewhere.
