The arrest of SK Masud Alam, a West Bengal resident, by Indian police, has brought to light new details regarding the massive WazirX hack earlier this year. Alam stands accused of creating a fraudulent account under the alias Souvik Mondal and selling it via Telegram to the hacker who later used it to exploit the crypto exchange.
The WazirX hack, which resulted in the loss of over $230 million in cryptocurrency, remains one of the most significant security breaches of 2024. Customers were left stranded, unable to withdraw their funds following the incident.
According to local reports, the police chargesheet has highlighted a lack of cooperation from Liminal Custody, a firm entrusted with safeguarding WazirX’s digital wallets. Despite numerous requests, Liminal has reportedly failed to provide crucial information, raising serious concerns about its security protocols.
The breach took place on July 18, primarily targeting a multi-signature wallet with six signatories. Five of these were from WazirX, while the sixth was from Liminal. This incident led to a massive loss, wiping off nearly 45% of WazirX’s stored assets.
In the wake of the hack, WazirX initiated a recovery plan ten days later, with the intention of returning 55% of the holdings of affected users. The remaining 45% was to be issued in USDT-equivalent tokens. This move, however, left many users with their assets locked.
To further incentivize the recovery of the stolen funds, WazirX offered a hefty $23 million bounty and a $10,000 reward in USDT for any community member providing actionable intelligence. Even so, the hacker remains silent.
The fallout from the hack has left WazirX customers frustrated and angry, particularly as they are unable to use their locked assets during one of the biggest bull runs of the year. “Bull Run is here but WazirX users can only watch. Market up 50%+ since the hack. $BTC hitting 90k ATH but what’s the point when funds are frozen?” lamented Indian crypto researcher Budhil Vyas on X (formerly Twitter).
The exchange’s recent launch of a ‘rebalancing calculator’ aimed to help affected users understand how they will be credited. However, this move has also faced criticism, with many users expressing concerns about the calculator’s accuracy. Some have pointed out that WazirX is only partially refunding tokens that were not affected in the hack, while others have noted the exchange’s portfolio has surged significantly in the current bull market, recovering the entire loss from the hack, yet user funds remain frozen.
Aditya Singh, the co-founder of Crypto India, expressed his dissatisfaction, stating, “It seems WazirX created rebalancing calculator, just to confuse people & prove to the court that they are doing something. Wazirx has a habit of complicating simple things.”
In the face of increasing crypto hacks, user frustration over the exchange’s recovery plans is mounting. The WazirX hack is a stark reminder of the increasing vulnerability of digital assets, with Blockchain lender Radiant Capital suffering a $50 million breach just last month and the US government’s crypto wallets targeted by hackers, leading to a loss of nearly $20 million.
