Hello Readers,
I hope all of you are doing well in your life and also enjoying the day with your family and friends while hustling in this wild crypto world. The rising sector of crypto is going mainstream and one of the salient features that it offers is the state-of-the-art security blockchain system which is almost impossible to hack or scam. However, though blockchain networks like Bitcoin, Ethereum or Hive are secure and safe for transactions or holding tokens, we can not say the same with exchanges or apps that work with cryptocurrencies. The world of cryptocurrency is ever-changing and ever-evolving, so when thousands of apps and exchanges are being built around this rising sector, trust and security become 2 important pillars of this ecosystem.
In today’s post, I would like to share one such incident which indicates that just like any other industry, the crypto sector is also not 100% secure. One prime example would be WazirX, one of India’s largest centralized crypto exchanges, which faced a massive $235 million hack in July 2023, not to mention that it shook the entire industry and its users to the core. In recent news which I stumbled upon today, the company is now taking bold steps to recover the stolen money and rebuild its reputation. So in this post, let us explore what exactly happened with WazirX, who was responsible, and what WazirX is doing to solve it. So, if you are interested, let’s take a dive into it without any further ado.
The Hack That Killed WazirX
In July 2023, one of India’s largest centralised exchanges WazirX became a victim of a major cyberattack that resulted in a total $235 million worth of cryptocurrency being looted. Initial investigations found that the attack was carried out by the North Korean Lazarus Group, a notorious hacker group infamously known for targeting global financial systems. This large-scale hack not only impacted the existing WazirX users but also highlighted vulnerabilities within the cryptocurrency ecosystem. Governments of the United States, South Korea and Japan later confirmed the Lazarus Group’s involvement, drawing attention internationally to such cybercrimes.
WazirX’s Recovery Plan
After being the victim of one of the largest crypto hacks in recent history, WazirX, currently owned by the Singapore-based Zettai Pte Ltd, has been working on the clock to recover stolen assets to regain their user's trust. Recently as stated in the news, the Singapore High Court has approved the company’s request to hold a scheme meeting, which is a vital forward step in their recovery process. Now, a scheme meeting is essentially a voting system where creditors, including affected users, decide on a recovery plan.
For WazirX, this plan includes…
Redistributing assets- The existing liquid funds will be converted into tokens and then distributed to users within the next 10 business days of the scheme’s approval.
Issuing recovery tokens (RTs)- These tokens will help ease the whole process of the ongoing asset recovery and compensate users.
Reactivating the platform- WazirX aims to restart all of its operations to regain its position and trust in the crypto market.
Using profits to repay users- Net profits that will be generated over the next 36 months will be reinvested into buying back recovery tokens, to ensure long-term user compensation.
The court also granted the WazirX a 16-week legal moratorium, providing protection and time to restructure without any kind of external interference, which will definitely help the process further.
Progress in Asset Recovery
On the brighter side, as a recent development, WazirX has successfully frozen a total of $3 million worth of their stolen assets in Tether (USDT). This gladly becomes the first physical progress in the recovery efforts and demonstrates the company’s commitment to retrieving the stolen funds. WazirX is working closely and tirelessly with law enforcement agencies, forensic experts and legal teams to trace and recover more assets as we talk. The founder of WazirX, Mr. Nischal Shetty has reassured users that this is just the beginning. “We are leaving no stone unturned to maximize recoveries and appeal to users to support the scheme,” he said.
Global Implications
The infamous WazirX hack is just one example of a growing trend of cyberattacks targeting the rising crypto industry. In 2024 alone, North Korea’s Lazarus Group has been linked to multiple high-profile thefts such as…
DMM Bitcoin- $308 million stolen.Upbit- $50 million stolen.Rain Management- $16.13 million stolen.
Without a doubt, all these notorious attacks pose significant threats not just to individual companies like WazirX or Upbit, etc, but also give a warning to the stability of the global financial systems. Governments from the U.S., Japan, and South Korea have spotlighted the need for collaboration between the public and private sectors to combat these malicious threats on a global level and secure the future of blockchain technology.
Last but not least, it seems the road to recovery is challenging for WazirX, but they look determined and hopefully retrieve and come out stronger. As WazirX can be seen taking bold steps like freezing stolen assets, restructuring its operations and engaging users in the recovery process, I think slowly as they execute these steps, the company may be able to rebuild its lost trust among its existing and new users and also provide a secure platform for its community in near future. But for us who are connected with this wild crypto world, we should also look carefully at this incident as a reminder and not at all neglect the importance of security and caution when dealing with crypto tokens or NFTs. It is always a good practice not to keep crypto in centralized exchanges, not to share your private keys with anyone, to use strong passwords and not to store them online, etc and also follow all the other healthy practices to stay safe from such incidents.