WazirX, a Mumbai-based cryptocurrency exchange, has confirmed a significant security breach resulting in the theft of over $235 million from one of its multisig wallets.
The incident, which occurred early Thursday morning, has led to an immediate halt in Indian rupee withdrawals as the company investigates. Crypto withdrawals were already suspended at the time of the incident, according to multiple customers of the exchange reached via Telegram.
In a statement posted on X, WazirX acknowledged the breach, calling it “a force majeure event beyond our control, but we are leaving no stone unturned to locate and recover the funds.”
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Security and blockchain monitoring services identified the suspected hacker’s Ethereum address, which was funded via Tornado Cash on July 10.
The affected WazirX multisig wallet “operated utilizing the services of Liminal’s digital asset custody and wallet infrastructure from February 2023,” and the team is unaware of the specific mechanism leading to the breach, according to a company post.
Their working hypothesis is that there was “a mismatch between the information displayed on Liminal’s interface and what was actually signed,” meaning the attacker was able to trick the team wallets into signing a malicious transaction that transferred wallet control to the attacker.
Liminal, a custody and wallet infrastructure platform for institutions, disclaimed responsibility for the security lapse in an X thread.
This sort of private key compromise is a recurring problem, according to Valerian Callens, senior research engineer at Quantstamp.
“Exploits like this are common but can be prevented by paying close attention to security best practices and industry standards in terms of key management,” Callens told Blockworks.
North Korea suspected
The compromised address has been actively swapping various cryptocurrencies, including PEPE, GALA, and USDT, into ether (ETH).
Onchain analysis by both Elliptic and ZachXBT point to “markings” or “hallmarks” of the North Korean Lazarus hacking group.
“This breach and the subsequent laundering of the stolen cryptoassets exhibit many of the hallmarks for a hack associated with North Korea, to the extent that we have attributed it as such in our transaction and wallet screening solutions,” Tom Robinson, co-founder and chief scientist at Elliptic told Blockworks.
ZachXBT was able to trace the Tornado Cash source funds back to bitcoin received from an exchange. However, there, the trail runs cold.
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“I identified a KYC exchange deposit made by the WazirX hacker,” he wrote, adding “Unfortunately this is probably not super helpful as KYC verified accounts can be easily purchased online for any exchange.”
Suspension of withdrawals in advance
Members of the WazirX telegram group say that withdrawals of crypto from the exchange were already suspended for a week or more prior to the exploit, with the exchange citing local regulations.
Others point to the lack of offshore exchange options in India as ultimately to blame for their plight.
The WazirX exchange token, WRX, with a market capitalization of about $60 million, is down roughly 21% on the day.
Updated, July 18, 2024 at 2:44 pm ET: added comment from Quantstamp.
Donovan Choy contributed reporting.
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