Delhi Police Uncover Breakthrough in $235 Million WazirX Crypto Breach Investigation

By: Eva Baxter

In a significant breakthrough, the Delhi Police have arrested a key suspect in the $235 million crypto breach at WazirX. The arrested individual, SK Masud Alam from Bengal, allegedly created a fake account on the platform under the alias “Souvik Mondal,” which was later sold via Telegram to a person named M. Hasan. This account was reportedly used to execute the breach that has left the crypto community reeling.

The investigative authorities have seized three laptops that belonged to WazirX's authorized signatories, which will be scrutinized for any misuse involving multisig wallets. Despite WazirX's full cooperation in the investigation, including providing comprehensive KYC data and transaction records, the Indian Cyber Crime Coordination Centre (IFSO) has not found any unauthorized access points within WazirX’s internal systems.

However, the investigation has encountered hurdles with Liminal, the digital asset custody provider tasked with securing WazirX’s wallets. Authorities have reported a lack of cooperation from Liminal, which has not furnished the necessary information requested by investigators, complicating efforts to trace the full extent of the breach. This lack of cooperation will be noted in a supplementary charge sheet as the investigation proceeds.

The case highlights the ongoing disputes between WazirX and Liminal, with both parties blaming each other for the security lapse. While WazirX alleges that Liminal failed to adhere to high security standards, Liminal has pointed fingers at WazirX's management practices.

Fund Recovery Strategies

In parallel to the ongoing investigation, WazirX has embarked on a series of initiatives aimed at fund recovery. One of the key measures includes reopening the trading platform to escalate trading volumes and generate revenue, part of which will be allocated to benefit creditors directly. Alongside this, WazirX plans to diversify its revenue streams by launching services such as a decentralized exchange (DEX), staking, an OTC desk, and futures trading, aimed at driving user attraction and revenue generation.

These strategic actions are designed not only to restore trust but also to replenish the platform's financial health. Additionally, WazirX is actively engaging in legal avenues to recover lost and illiquid assets. This involves tracking these assets to prevent unauthorized withdrawals, aiming to maximize potential creditor returns.

Moreover, WazirX is exploring “White Knight” partnerships, which would involve inviting investors to inject rescue financing into the recovery process. This infusion would provide much-needed financial support that could aid in compensating creditors and stabilizing operations.

These comprehensive steps reflect WazirX’s commitment to navigating the fallout from the breach, seeking to fortify its platform both financially and operationally.