As cryptocurrency exchanges continue to face regulatory heat, India’s largest exchange WazirX announced on Thursday that it has experienced a huge data security breach, allegedly leading to the transfer of around $234 million worth of digital assets to a new location.
The cryptocurrency exchange has temporarily stopped allowing user withdrawals from the exchange and confirmed the security vulnerability on social media site X.
We are aware that there was a security breech in one of our multi-sig wallets. Our group is looking into the matter right now. INR and cryptocurrency withdrawals will be momentarily suspended to protect your assets, the business stated.
A cryptocurrency wallet that needs two or more private keys to open and take money out of is known as a multisig wallet.
The corporation confirmed that there had been a cyberattack in “one of our multisig wallets involving a loss of funds exceeding $230 million” in another X post. Starting in February 2023, this wallet was used to run using Liminal’s digital asset custody and wallet infrastructure services.
WazirX claims that a disparity between the data that Liminal’s interface showed and the substance of the transaction itself was the source of the cyberattack.
Last December, regulatory pressure from the government and a strict crypto tax regime caused the cryptocurrency exchange WazirX to witness a sharp decline in trade volume, which plummeted to $1 billion in 2023, a staggering 90% decrease from 2022. The Indian government imposed a 30% tax on virtual currencies in 2022, with a 1% discount for each transaction made using a cryptocurrency. The Foreign Exchange Management Act of 1999 (FEMA) and the Prevention of Money Laundering Act of 2002 (PMLA) both have sections pertaining to cryptocurrency instances that the Enforcement Directorate (ED) looked into in the same year.
According to sources, WazirX’s accounts totaling Rs 64.67 crore were frozen in August 2022 after the ED opened a money laundering inquiry into the cryptocurrency exchange’s purported assistance in helping 16 Indian fintech companies and loan apps by transferring funds to unidentified foreign wallets. WazirX was later permitted to resume its banking activities after the ED removed the prohibition on it accessing its bank accounts.
