WazirX Hack: Coinbase, Polygon Join India’s BWA Internal Groups For Probe

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As a researcher with years of experience in the digital asset industry, I find it heartening to witness the proactive steps being taken by India’s Bharat Web3 Association (BWA) following the WazirX hack. The formation of two internal groups dedicated to enhancing cybersecurity and consumer protection is a commendable move, especially given the growing importance of these aspects in the crypto world.

As a result of the $230 million hack on WazirX, India’s Bharat Web3 Association (BWA) is taking proactive measures to bolster cybersecurity and consumer protection within the cryptocurrency sector. Led by Dilip Chenoy, the BWA has established two new internal teams focused on these key areas. Furthermore, these teams will assist in investigating the recent security incident.

BWA Aids WazirX Hack Recovery

The assemblage will consist of delegates hailing from all BWA member organizations, including WazirX, Coinbase, Polygon, CoinSwitch, Liminal, Biconomy, Tax Nodes, Giottus, and Hike. Additionally, the contending exchange following the breach, CoinDCX, will participate as well. Their objective is to scrutinize and revise the existing consumer code of conduct while tackling current cybersecurity issues.

On July 18, it was reported that WazirX, India’s biggest crypto exchange, suffered a loss of approximately 45% of its holdings after one of their multisig wallets were hacked. The suspected perpetrators behind this attack, known as the Lazarus Group from North Korea, are said to have made off with various types of cryptocurrencies. According to data from blockchain analysis firm Lookonchain, the assets stolen during the WazirX hack included:

    $102 million in Shiba Inu (SHIB)
    $52.5 million in Ethereum (ETH)
    $11.24 million in Polygon (MATIC)
    $7.6 million in Pepe Coin (PEPE)
    $135 million in Tether (USDT)
    $3.5 million in Gala (GALA)

The industry association has been keeping tabs on the ongoing situation and has communicated with both WazirX and Liminal, as reported by Moneycontrol. Chenoy stated further, “We’ve requested each of them to conduct comprehensive investigations, identifying the root cause and any legal repercussions, and suggest appropriate actions following this incident.”

Furthermore, I too noted that the BWA proposed an independent review of the forensic report to maintain fairness and comprehensiveness. Additionally, I concur with their decision to involve internal teams for addressing the recent cyberattack. In my own words, I would say: We are advocating for a neutral assessment of the forensic findings, and we will also enlist our internal resources to handle the latest security breach.

“It’s been decided that we’ll form two teams to tackle problems relating to cybersecurity and user experience, considering both aspects moving forward. These teams will also investigate the matter involving WazirX and propose solutions.”

Additionally, the cybersecurity team will comprise top security executives from the associated companies, known as Chief Information Security Officers (CISOs). These experts will work together to establish standard protocols and devise strategies to avert future security threats, similar to the recent breach incident. Until now, the BWA’s primary focus has been on Financial Intelligence Unit (FIU) registration and anti-money laundering matters. But this unexpected attack necessitates a change in focus, with greater emphasis on implementing stronger cybersecurity safeguards.

Nischal Shetty Reveals Update On Regulatory Front

“Chenoy recommended that our members should be particularly cautious regarding cybersecurity matters. We plan to confer separately with cybersecurity specialists and internally among ourselves to enhance our defenses against potential risks. Moreover, our members are actively collaborating with several government departments and will maintain this collaboration,” Chenoy said in summary.

As an analyst, I’d rephrase it as follows: “I, as the founder and CEO of WazirX, have made it clear that our exchange is committed to working closely with relevant authorities. We’ve already submitted our records to CERT-In (the Indian Computer Emergency Response Team) and maintain regular communication with the Financial Intelligence Unit (FIU) and regulators. It’s important to note that we are viewed as victims of a meticulously planned hack within the government agencies.”

During the ongoing investigation, the affected platform has temporarily halted withdrawals and cryptocurrency trading. To minimize damages and restart operations, the exchange has suggested a recovery strategy. As per this plan, customers can access and trade approximately half (55%) of their token holdings at any moment, regardless of whether their assets were taken or not.

As a long-time user of cryptocurrency exchanges, I have witnessed both successes and failures in the industry. The recent announcement by the exchange that the remaining 45% of their holdings would be converted to USDT (a stablecoin) and locked has sparked controversy among customers and peers alike. While I understand the need for such a move to secure the future of the exchange, I cannot help but feel uneasy about the lack of transparency and community involvement in this decision-making process.

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2024-07-31 13:08