Indian crypto exchange WazirX has announced that it lost virtual assets valued at over $230 million due to a cyber attack, which is now linked to North Korea.
Late Thursday update from WazirX, the attack specifically targeted one of WazirX’s multi-signature wallets, known as digi-cash lockers. These wallets are designed for enhanced security by requiring multiple private keys to authorize transactions. WazirX’s transaction verification process involves approval from multiple parties.
WazirX Reveals Details of $230 Million Cyber Attack
The hacked wallet at WazirX had six signatories—five from the WazirX team and one from Liminal. Typically, transactions on the platform require approval from three WazirX signatories and final approval from Liminal’s signatory.
The attack exploited a vulnerability between Liminal’s interface and the actual transaction data, enabling the attacker to bypass the multi-signature security measures and gain control of the wallet.
Upon discovering the breach, WazirX halted all crypto withdrawals and blocked some deposits. The firm also reached out to affected wallet owners to assist with recovery.
WazirX has labeled the incident as a “force majeure” event, a term usually reserved for natural disasters or wars. The exchange stated that despite taking all necessary security measures, the cyber attackers managed to breach these defenses. WazirX is committed to locating and recovering the stolen funds.
Blockchain Firms Trace Stolen WazirX Assets to North Korea
Blockchain analytics platform Lookchain believes it has identified the stolen assets from WazirX and suggested that the perpetrators are already seeking buyers for them.
UK-based blockchain analytics firm Elliptic, which focuses on financial crime compliance, observed that the thieves have begun exchanging some of the stolen tokens for Ether using various decentralized services. Elliptic’s investigation of the blockchain data indicates that the thieves are likely linked to North Korea.
North Korea has increasingly turned to cryptocurrency to circumvent international sanctions, using stolen crypto assets to fund its nuclear weapons program and enrich the family of Supreme Leader Kim Jong Un.
WazirX’s Regulatory and Ownership Issues Amidst Cyber Attack
WazirX, one of India’s major crypto exchanges with approximately 16 million users, was acquired by Binance in 2019. However, there is ongoing dispute over the ownership of WazirX. Binance founder Changpeng Zhao, also known as “CZ,” has claimed that the deal was never finalized, while WazirX co-founder Nischal Shetty maintains that it was.
The connection to Binance has brought WazirX its share of issues. Binance was suspended from operating in India in December 2023 for violating anti-money laundering rules but was later cleared to operate with a $2.25 million fine.
WazirX itself faced regulatory challenges in India, including an $8.1 million freeze on its assets in August 2022 as part of a money laundering investigation.
Legislation to regulate or ban cryptocurrency has been periodically proposed in India. As of mid-2024, the government has yet to finalize its position on cryptocurrency.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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