WazirX, one of India’s top cryptocurrency exchanges, hosted its inaugural townhall meeting on YouTube after experiencing a major security breach. This breach led to the loss of $235 million. The meeting’s goal was to provide users with transparency, updates on efforts to recover the stolen funds, and information about steps being taken to boost security measures.
Leadership Addresses the Crisis: An Overview of the Hack
During the townhall, Jason Kardachi, George Gwee, and Nischal Shetty, from Zettai which acquired WazirX, discussed the recent hack. They focused on the severity of the breach and are currently investigating how the hackers managed to bypass the exchange’s robust four-step signature authentication process. This system was specifically designed to secure cold wallets that store Ethereum and ERC-20 tokens.
Investigators traced the attack to a blind-signing vulnerability during a transaction on the Liminal platform, a third-party security provider. Although Liminal had strong security protocols, the blind signing process let hackers initiate unauthorized transactions without detection, revealing a critical system weakness. The WazirX team is actively investigating the breach’s full extent to prevent future incidents.
Also Read: WazirX Finds No Internal Compromise in $230M Hack, Blames Liminal
Legal Protections and Financial Recovery: WazirX’s Next Steps
In response to the hack, WazirX has taken legal action to safeguard its assets and provide a framework for recovery. On August 27, the Zettai team applied for a six-month moratorium in Singapore. This legal move is not an indication of insolvency or bankruptcy but rather a protective measure to pause legal actions against the company, allowing time to restructure and recover stolen funds.
The company has received a 30-day moratorium granting legal protection while they seek creditor support for their restructuring plans. During this period, WazirX is proposing a restructuring of crypto balances under Singapore’s Scheme of Arrangement. This proposal allows users with crypto holdings to participate in the recovery process.
Ongoing Efforts to Recover Stolen Funds
The townhall meeting also highlighted WazirX’s multifaceted approach to recovering the stolen assets. Jason Kardachi outlined a plan to distribute the remaining tokens equitably among users, emphasizing that he would make these distributions in cryptocurrency rather than fiat currency. The recovery strategy includes engaging with investors and potential partners who can provide capital to bolster the exchange’s financial standing.
Nischal Shetty provided updates on the status of INR withdrawals, which have resumed on the platform. Indian law enforcement agencies have partially frozen INR funds due to ongoing investigations, even though the hack did not impact these funds. The withdrawal process will unfold in two phases, allowing users to access a portion of their funds until the investigations conclude.
In parallel, WazirX has reached out to over 500 cryptocurrency exchanges to block wallet addresses linked to the hack. The team is collaborating with cybercrime units in India and Singapore to trace and freeze stolen assets, though they cautioned that the full recovery of funds remains uncertain.
Looking Ahead: WazirX’s Commitment to Security and User Trust
As WazirX navigates this challenging period, the exchange’s leadership is focusing on enhancing security and rebuilding trust with users. The townhall meeting ended with a request for patience and support from the community as the exchange puts its recovery and restructuring plans into action.
The incident highlights the crucial need for robust security measures in the cryptocurrency space. WazirX’s response may become a case study for other exchanges facing similar threats.
Also Read: India’s CoinDCX Establishes $5.9M Investor Protection Fund Following WazirX Hack
Discussion about this post