24/7 Cryptocurrency News

Exchange Refutes Security Lapse Allegations On $230M Exploit

Published

5 months ago

August 2, 2024

WazirX finds itself at the center of a heated controversy following a massive $230 million hack. The incident has not only raised alarming questions about the platform’s security measures but has also sparked a contentious debate between WazirX and blockchain security firm TruthLabs.

WazirX Hack Under Scrutiny

WazirX, a major cryptocurrency exchange, has forcefully denied accusations of security lapses that allegedly led to a staggering $230 million hack of customer assets. The company has responded to claims made by TruthLabs, a blockchain security firm, asserting that their analysis is both incorrect and misleading.

According to WazirX, the exchange employs a robust multi-signature system for their Ethereum wallet, requiring four out of six keys for transaction approval. They clarified that three separate WazirX key holders and one from their custody partner, Liminal, are involved in signing all transactions. This setup, they argue, contradicts TruthLabs’ claim that a single entity controlled five of the six signees.

TruthLabs had raised several red flags about WazirX’s operations. On July 6th, 12 days before the WazirX exploit, they had warned about a security vulnerability affecting multiple Layer 2 blockchains, including Blast, Optimism, Mantle, and Coinbase’s Base. They claimed these platforms use similar multi-signature contracts that put billions of dollars of user funds at risk.

Furthermore, TruthLabs suggested that WazirX’s main exchange address, established in 2022, originated as a Binance address previously linked to fraud and theft. They implied that WazirX might not have fully separated from Binance as claimed. The analysis also pointed out that WazirX’s deployer address had only ever sent funds to three destinations: a Binance wallet, a burn address, and a SwipeX contract, allegedly associated with laundering stolen funds.

WazirX has strongly contested these claims. The exchange insists it has always had multiple key holders, not just one as suggested by TruthLabs. They emphasized that even the malicious transaction leading to the attack required signatures from three separate WazirX signers and one Liminal signer. WazirX asserts this information is verifiable through on-chain data, encouraging skeptics to check the blockchain records themselves.

Also Read: Bitget Report Reveals Tap-To-Earn Game Users Plays At least 5 Games

WazirX Proposes Unique Recovery Plan for Affected Users

In response to the hack, WazirX has proposed a novel 55/45 approach to provide a faster and more flexible solution for funds recovery. This plan offers users two options to manage their remaining crypto assets, either 55% of the crypto assets would be immediately available to users for trading or withdrawals or the remaining 45% will be converted to a USDT-equivalent token and locked.

WazirX founder Nischal Shetty explained that for both options, the crypto exchange will create a balanced portfolio for the 55% unlocked portion using a mix of crypto assets derived from other available assets on the platform. If the unlocked portfolio includes affected tokens, WazirX will balance it by replacing the affected portion with a basket of unaffected crypto assets available on the platform.

This approach has however raised heavy criticisms amongst the community although it had aims to provide users with immediate access to a significant portion of their assets while maintaining the possibility of further recovery for those who choose to wait.

Also Read: GameStop Short Seller Andrew Left’s Deleted X Posts Emerge Amid Lawsuit