WazirX Under Fire; Investors Demand Justice Post $230M Hack

On 18 July 2024, WazirX, India’s largest cryptocurrency exchange experienced a major security breach, which resulted in the loss of $230 Million (₹2,000 crore) of user funds. As the news of the hack caught the public’s attention, the exchange suspended withdrawals and sought help from law enforcement entities, ethical hackers, and other crypto exchanges.

However, these efforts were not considered sufficient by most of the victims as concerns of foul play rose. The lack of sufficient communication by both Nischal Shetty, CEO of WazirX, and the exchange itself has catalyzed the affected user’s anxiety and anger.

BIG BREAKING 🚨🚨: The #WazirX situation is now a DISASTER.

It’s been 27 days since the hack, with ZERO communication. Users still don’t know if they will get their funds back.

For the past 5 days, there have been no updates from @WazirXIndia, yet they continue to promote their…

— Pushpendra Singh Digital (@PushpendraTech) August 12, 2024

Timeline of the WazirX hack

• July 18th—The news of the hack goes public. WazirX acknowledges the hack and immediately suspends all withdrawals of both fiat and cryptocurrencies as a security measure. 
• July 19th—The exchange files a police complaint and reports the incident to India’s Financial Intelligence Unit (FIU) and the Indian Computer Emergency Response Team (CERT-IN). 
• July 21st—The Exchange takes a snapshot of all user balances as of July 21, 2024, at 8:30 pm IST. This move faced wide public criticism as to why it was done 3 days after the hack.
• July 21st—The exchange announced a bounty program to recover stolen funds. Offers a 10% bounty(approx $23 million)
• July 27th—The exchange runs a poll asking users what to do with funds. Both options seem to disadvantage users.
• July 29th—The exchange clarifies that the poll is a preliminary step for gathering user feedback and is not legally binding.
• August 5th—An FIR is registered by Delhi Police’s Special Cell raising questions as to why this step was taken so late
• August 8th—After facing massive backlash, The exchange decided to restore all user balances to their state as of July 18, 2024, 1 PM IST, undoing all trades made after the hack.
• August 13th – The exchange clarifies again that they are in the process of restoring user balances but fail to give any specific details

Concerns

Despite the growing anxiety of victims, social media outrage, and media backlash, The exchange has yet to announce its compensation plan and a timeline for restoring users’ funds. 

Numerous users have pointed out that Mahin Gupta, the founder of Liminal Custody, the custodians responsible for a multi-sig signature who were blamed by the exchange for the breach of their multi-signature wallet, also has ties to Nischal Shetty, through another venture called Pi42 exchange.

Gupta is an early investor and advisor at Pi42, which raised suspicions about an insider’s hand in the hack. What raised more eyebrows is the fact that this detail was present on the Pi42 website up until now but was recently removed.

The entire Indian crypto ecosystem is watching WazirX, as the way they handle this situation will either strengthen or weaken Indian users’ trust in cryptocurrencies. 

WazirX victims are uniting

Thousands of affected investors have turned to social media and each other to demand justice and compensation, frustrated by the silence from not only WazirX but also Indian authorities.

In a recent discussion on X, victims discussed WazirX’s financial health, notably the exchange’s recent disabling of its proof-of-reserve features.

The second Positive step #WazirX could have taken by now is to publish a forensic report conducted by an external auditor.

The community deserves to know who is at fault.

— Kashif Raza (@simplykashif) August 13, 2024

The community also discussed paths to legal inquiry, with a majority siding with a Public Interest Litigation option. Many users also called for more accountability from Wazirx’s leadership team, Liminal custody, and the government.

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