US$230 million was stolen from WazirX, India’s leading exchange: Binance cut off cooperation due to suspected money laundering, and annual trading volume fell by 90%

Two years ago, WazirX attracted the attention of the market due to its months-long acquisition dispute with Binance. Now, this Indian crypto exchange has once again become a hot topic of public discussion due to the stolen assets of up to 230 million US dollars, which has also attracted much attention on the development of India's crypto market.

Nearly half of the reserve funds were stolen, white hat bounty program launched

On July 18, WazirX suffered a security breach in its multi-signature wallet, resulting in the theft of $230 million worth of crypto assets, nearly half of which were SHIB. According to the June transparency report disclosed by WazirX, its asset holdings reached $503 million, which also means that the exchange lost more than 45% of its reserves.

The next day, WazirX released preliminary investigation results on the attack, stating that since February 2023, the WazirX wallet has been operated using Liminal’s digital asset custody and wallet infrastructure services. The cyberattack stems from the discrepancy between the data displayed on the Liminal interface and the actual content of the transaction. During a cyber attack, the information displayed on the Liminal interface did not match the actual signed content. WazirX suspects that the payload was replaced to transfer wallet control to the attacker.

Regarding WazirX’s “accusation”, Liminal Custody is not willing to “take the blame”. Liminal Custody issued a statement stating that its infrastructure has not been damaged and all wallets (including WazirX’s wallet) are safe. Unfortunately, three victim machines had malicious code injected into transactions, indicating a sophisticated and planned attack against a certain Gnosis smart contract multi-signature wallet. According to analysis by blockchain analysis company Elliptic, North Korea-related hackers may be behind the hacking incident.

Currently, the WazirX hacker has sold all the stolen assets into ETH. The attacker’s ETH holdings have exceeded 59,000, and their value has now exceeded US$200 million. To trace and recover the stolen funds, WazirX has reported the incident to the Financial Intelligence Unit (FIU) and Computer Emergency Response Team of India (CERT-In) and contacted over 500 exchanges to block the identified addresses.

At the same time, WazirX has also launched a 10% white hat bounty program to recover funds. White hat hackers, blockchain forensic experts and network security professionals from all over the world will be invited to join this task. The action plan includes tracking down Steal funds, recover customer assets, and conduct deeper analysis of cyberattacks.

In addition, due to cyber attack theft affecting WazirX’s ability to maintain 1:1 asset collateral, the exchange has temporarily suspended trading to conduct thorough data inspection and security audit procedures, and strives to enable withdrawals as soon as possible.

As India’s leading crypto exchange, WazirX’s trading volume has also seen a sharp decline. According to data previously disclosed by WazirX officials, the exchange's trading volume has dropped to approximately US$1 billion in 2023, a drop of more than 90% from the same period of the previous year, and a 97% drop from 2022. Of course, this also has an important relationship with India’s increasing regulatory pressure and onerous crypto taxation system.

Due to the “breakup” between ownership and Binance, WazirX’s annual trading volume fell by more than 90%

WazirX was first known to the outside world because it was a partner of Binance in entering the Indian market, and was once the latter acquisition target. However, after WazirX was accused of money laundering by Indian regulators, Binance “drawn a line” with it, which also triggered an ownership dispute. The outcome of this dispute also planted the seeds for this theft.

In 2022, WazirX claimed to move its base from India to Dubai due to India’s implementation of a new tax system on crypto transactions. But not long after, WazirX was accused by Indian law enforcement agencies and was under investigation for two cases of money laundering and violation of foreign exchange rules. It was claimed that 27.9 billion rupees (over 350 million US dollars) were laundered on the platform, and the personal information of some executives of the exchange was also frozen. Tens of millions of dollars in assets.

Binance issued a document in 2019 announcing that it had "acquired" the exchange. However, after WazirX was accused of money laundering by the Indian authorities, Binance founder CZ immediately issued a document stating that the acquisition transaction had never been completed and Zanmai Labs was the operator. An entity established by WazirX and by the original founders, Binance has never at any time owned any shares in Zanmai Labs, the entity that operates WazirX. Binance only provides wallet services to WazirX as a technical solution, as well as integration using off-chain transactions to save on network fees. WazirX is responsible for all other aspects of the WazirX exchange, including user registration, KYC, trading and initiating withdrawals.

CZ’s clarifying remarks were immediately refuted by WazirX CEO Nischal Shetty, who stated that WazirX was acquired by Binance and Zanmai Labs is an Indian entity owned by Nischal Shetty and its co-founders. Zanmai Labs received a license from Binance to operate trading pairs of Indian rupees and cryptocurrencies in WazirX. Binance operates cryptocurrency trading pairs and handles cryptocurrency withdrawals. Users can verify this fact by visiting WazirX’s TOS (Terms of Service). Additionally, Binance owns the WazirX domain, root access to AWS servers, all crypto assets, all crypto profits, don’t confuse Zanmai with WazirX.

隨後，雙方更是爆發長達數月的口水戰，各執一詞。幣安認為WazirX就其不當行為推卸責任，CZ主張用戶應該將其在WazirX上的資金轉移到幣安，並表示幣安在2022年2月要求轉移WazirX系統源代碼、部署、操作，但被WazirX拒絕了，幣安無法控制他們的系統。且幣安還在不久後停止支援WazirX與幣安之間的鏈下轉帳功能。而另一方的Zanmai Labs則被曝尋求透過法律途徑處理與幣安的所有權糾紛。

且這場所有權爭議更是在2023年進一步升級。 2023年1月，幣安發出“最後通牒”，要求WazirX就雙方誤導性關係發布澄清聲明，收回Nischal Shetty前關於幣安擁有WazirX的聲明並刪除服務條款中所有幣安相關內容，否則幣安可能會在2月3日之前終止WazirX的服務協議。但這項要求遭到WazirX的拒絕，並表示所謂“澄清聲明”是“不道德的”，幣安試圖利用“媒體壓力和威脅迫使Zanmai發布虛假和誤導性的聲明作為“澄清”。不僅如此， WazirX還表示，幣安指控是虛假且未經證實的，其在對交易所的控制中獲得了豐厚的利潤，這一點也WazirX也在2023年5月的推文強調稱，幣安控制著WRX代幣（幣安Launchpad專案）並持有所有IE0收益，在過去5個季度（即自2022年1月起）沒有進行過季度銷毀。服務以進行反擊，後者用戶無法再使用幣安錢包服務。停止合作後，幣安並未放緩佈局印度市場的步伐，如今已佔據該國40億美元加密持有量的近90%，印度市場利潤豐厚是幣安等加密企業佈局的重要原因。根據區塊鏈分析平台Chainalysis發布的《2023年全球加密貨幣採用指數》顯示，印度在加密貨幣採用方面名列榜首，足以可見印度在加密市場仍佔據著重要份額，甚至印度證券交易委員會為了吸引投資者，今年也宣布計畫2025年正式引進T+0，以與加密貨幣競爭。所APP因不遵守印度的反洗錢規則，被印度金融情報機構要求封鎖，從印度蘋果應用商店中下架。經批准的離岸加密相關實體，條件是在與FIU聽證會後支付罰款。例如自印尼因引入加密貨幣稅制的部分徵收期後，導致其在2023年的加密貨幣稅收收入下降63%至3170萬美元。 ，背後的原因是加密貨幣預計在不​​久的將來成為印尼整體經濟不可或缺的一部分。需要全球共識，而印度儲備銀行也提交了其對加密貨幣的看法，並強調與加密貨幣相關的宏觀經濟風險，以及與逃稅和財政穩定相關的問題。嚴監管態度的鬆動或將帶動印度市場進一步發展，而WazirX的被盜事件也或將為其他加密交易所提供更多市場空間。

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