North Korea-Linked Exploiter Drains $230 Million from WazirX
A recent report from blockchain tracker Lookonchain revealed that an exploiter associated with North Korea has siphoned off approximately $230 million from the Indian cryptocurrency exchange WazirX. As of Friday morning, this exploiter has converted a significant portion of the stolen funds into ether (ETH), currently holding over 59,097 ETH valued at around $200 million, alongside an additional $15 million in a variety of alternative tokens.
The conversion of stolen assets into ether is a common tactic employed by hackers. This method is often utilized because it allows them to leverage mixing services, such as Tornado Cash, which obfuscates transactional activity, making it significantly more challenging to trace the origins of the funds and ultimately launder the money successfully.
Market Implications and Exchange Performance
As of Friday morning, the market conditions on WazirX appeared to be dire. Almost all tokens available on the exchange were trading at steep discounts compared to their global and local prices, indicating a troubling lack of liquidity and overwhelming selling pressure. The trading pair for bitcoin against the Indian rupee (BTC/INR) dropped by 22% over the past 24 hours. In contrast, other local exchanges, including CoinDCX and Zebpay, only experienced a minor decline of 2%. Notably, the shiba inu/rupee pair saw a staggering decrease of 30%, while WazirX’s native token, WRX, plummeted by 40% during the same timeframe.
Despite these unfavorable trading conditions, WazirX reported a spike in trading volumes, reaching $8 million in the past 24 hours, a significant increase from just $2.2 million on Wednesday. This rise in trading volume might suggest a frantic attempt by users to liquidate their holdings in the wake of the security breach, further exacerbating the market instability.
The Security Breach Explained
On Thursday, WazirX experienced a security breach affecting one of its multisig wallets, resulting in the theft of over $100 million worth of shiba inu (SHIB) and $52 million in ether, among other assets. The stolen funds represented more than 45% of the exchange’s total reserves, as reported in a June 2024 account. This breach has raised serious concerns among users regarding the viability of the platform and the safety of their investments.
WazirX attributed the incident to a “mismatch” between the digital interface utilized for transactions and the major crypto wallet that was compromised. They clarified that this discrepancy ultimately led to the exploit, despite having a multisig wallet structure that required five signers from WazirX to authorize transactions. In their official statement, the exchange noted, “During the cyber attack, there was a mismatch between the information displayed on Liminal’s interface and what was actually signed. We suspect the payload was replaced to transfer wallet control to an attacker.”
Community Reactions and Concerns
The response from the Indian crypto community has been overwhelmingly skeptical regarding WazirX’s explanation of the breach. Pankaj Tanwar, a well-known crypto YouTuber, expressed his disbelief on the social media platform X, stating, “6 people there, need 4 to verify still hacked and blame game. This mistake will damage #Crypto in India beyond imagination.” This sentiment reflects a broader concern about the adequacy of security protocols in place at cryptocurrency exchanges.
Another commentator, known as @studybitcoin21, raised questions about the security standards and compliance measures being implemented by exchanges. They remarked, “How is this good security? What kind of compliance is going on exchanges?” These criticisms highlight the growing demand for increased transparency and security in the rapidly evolving crypto market.
Current Status of WazirX
In light of these events, WazirX has temporarily paused all crypto and fiat withdrawals, a decision aimed at preventing further financial losses while they investigate the breach. The future of the exchange remains uncertain as users grapple with the implications of this significant security incident. As the situation develops, the effectiveness of WazirX’s response will be closely scrutinized by both users and regulatory bodies, with many hoping for a swift resolution that restores trust in the platform.