$230 Million Down the Drain: North Korean Involvement in WazirX Theft

Indian cryptocurrency exchange WazirX recently fell victim to a cyberattack that resulted in the loss of over $230 million in virtual assets. The attack has been linked to North Korean hackers and targeted a multi-signature wallet, which requires multiple keys for transaction authorization.

The compromised wallet was managed by six individuals: five from WazirX and one from Liminal. Typically, transactions on the platform require approval from three WazirX signers and one from Liminal. The hackers managed to exploit discrepancies between Liminal's interface and the actual transaction data, bypassing the security measures.

Upon discovering the breach, WazirX halted all cryptocurrency withdrawals and froze several deposits. The company also reached out to affected wallet owners to assist in recovering the stolen funds. WazirX representatives called the incident a "force majeure," emphasizing that all necessary steps had been taken to protect clients' assets.

Blockchain analytics platform Lookchain reported that traces of the stolen assets have been found, and the perpetrators are looking for buyers. British blockchain analytics firm Elliptic indicated that the thieves began converting the stolen tokens into Ether through various decentralized services. Elliptic also confirmed that the criminals are linked to North Korea, which uses cryptocurrency to circumvent international sanctions and fund its nuclear program.

WazirX, one of India's largest cryptocurrency exchanges with 16 million users, was acquired by Binance in 2019. However, the acquisition has been mired in controversy: Binance founder Changpeng Zhao claims the deal was never finalized, while WazirX co-founder Nischal Shetty insists otherwise.

This connection with Binance has added to WazirX's challenges. In December 2023, Binance's operations were suspended in India for anti-money laundering violations. The platform resumed operations only last month after paying a $2.25 million fine.

WazirX has also faced issues with Indian regulators: in August 2022, the company had $8.1 million in funds frozen as part of a money laundering investigation.

Legislation to ban or restrict cryptocurrencies is periodically debated in India, but as of mid-2024, no final decision has been made. Joanna Cheng from Fireblocks commented that the lack of clear regulation in India's cryptocurrency sector creates uncertainty and risks for both companies and individual users.