The WazirX breach allegations have taken a new twist after Liminal, the exchange’s strategic digital custody partner, vehemently denied accusations of responsibility for the July WazirX security breach. India’s leading cryptocurrency exchange lost $235 million to hackers during the July 2024 hacking incident.
Liminal’s statement about the WazirX security breach on October 22, 2024, termed the exchange’s assertion of its culpability a “disinformation campaign,” noting that WazirX has continued to use its services many days after the incident, adding that it held more than $175 million in crypto on its platform. Liminal insisted the team at WazirX had the capability of initiating transactions involving the exchange’s funds and that “Approximately $50 million of their user assets remain on wallets accessed via Liminal infrastructure.”
Too Little, Too Late
In further trying to avoid any blame, Liminal said the decision to disclose 240,000 digital wallets in a filing at a Singapore High Court dubbed demonstration that it was undertaking restructuring efforts in a bid to improve transparency to meet the legal requirements was too little too late. While trying to use the disclosure to showcase itself as “one of the most open and trusted exchanges,” Liminal is concerned that the move is not only regrettable but also a tactical one that is intended to hoodwink the authorities and users. According to Liminal, the bulky document containing over 1,100 submissions raises more questions than answers within the crypto community.
Liminal’s denial of guilt in the WazirX breach allegations comes hot on the heels of a devastating security breach on July 18, 2024. However, the crypto exchange’s response to the hacking incident has been nothing short of one misstep after another, leading to deepening mistrust between WazirX and its user base. The blame game started immediately following the WazirX security breach with the exchange’s attempts to deflect responsibility by blaming Liminal, its digital custody partner. Immediately after the incident, WazirX posted a statement on X claiming the hackers had taken advantage of a discrepancy in a multi-sig wallet on Liminal’s platform.
WazirX Not Forthright with Information
The WazirX security breach, supposedly orchestrated by the notorious North Korea-based Lazarus Group, initially stole 15,298 Ethereum (ETH) tokens, which it swapped for different altcoins, including Shiba Inu (SHIB), Polygon (MATIC), and Pepe Coin (PEPE). After accomplishing several exploits, the hackers finally amassed over 59,097 ETH in total, seriously incapacitating WazirX’s ability to maintain a 1:1 collateral ratio required to stabilize the exchange.
Following the incident, WazirX temporarily suspended withdrawal services in crypto assets and Indian rupees to try to contain the damage. Unfortunately, the sudden halt in service provision led to a panic that only made a bad situation worse as users rushing to access their funds, even in cases of emergencies, hit a dead end. Many days following the WazirX security breach, withdrawals remained suspended, and social media became awash with stories about frustrated users who felt abandoned by the exchange. To make matters worse, WazirX hasn’t been too forthright with information on recovery efforts and substantial updates, leaving users in the dark about whether they will ever recover their funds.
Conclusion
The denial of WazirX breach allegations by Liminal came soon after crypto exchange CoinSwitch co-founder Ashish Singhal accused WazirX of transferring at least $70 million of users’ crypto assets to crypto exchanges KuCoin and Bybit. In his X statement, Singhal said they had observed a large amount of funds move from WazirX to Bybit and KuCoin after the WazirX security breach. The CoinSwitch founder said they had pinpointed the” movement of $72.12 million worth of crypto to Bybit and $1.5 million funds to KuCoin.”
With such accusations at a time when users’ funds are locked away, and WazirX hasn’t uttered a word to thousands of stranded users whose funds are locked away, the victims have painted the social media red with accusations, frustrations and personal experiences on the devastating impact of the WazirX security breach. The exchange now faces a new possibility of legal challenges following the controversial decision to seek justice in Singapore and not locally.
