WazirX co-founder announces bounty program to recover funds

WazirX co-founder Nischal Shetty has announced a bounty program to help recover or freeze funds stolen in the exchange’s recent hack.

The attack resulted in the loss of more than $234 million in various cryptocurrencies, crypto.news reported earlier this week.

Team WazirX is actively working on the next steps.

1. We are creating a bounty program to help us freeze/recover stolen assets
2. We are having more discussions on continuous monitoring of fund movements, we are in contact with several teams that claim to be experts in this regard.
3. We informed everyone…

— Nischal (Shardeum) 🔼 (@NischalShetty) July 20, 2024

According to an X post from Shetty, the bounty program was launched earlier today. WazirX had initially offered a total reward of $11.5 million for recovering the assets, but the co-founder later said that was updated to $23 million after crypto security detective ZachXBT intervened.

Shetty said the bounty program is a way for the exchange to enlist the help of the crypto community in its quest to recover funds stolen in the July 18 cyberattack.

According to WazirX’s official blog, the program consists of two initiatives. The first is a tracking and freezing bounty that aims to find and freeze stolen assets. The second is a white hat recovery bounty that offers a reward of 10% of the recovered amount to those who help recover the funds.

The exchange shared an ERC20 wallet address with the public for the return of stolen funds, as can be seen below.

Source: WazirX

The crypto community on X has expressed concerns about how “slow” the measures taken to recover funds have been, with some speculating about how the attack occurred, with many speculating that the Lazarus Group was involved.

If it really is Lazarus Group, the $10 million reward means nothing because they won’t just hand over the money or be found and held legally accountable.

5% is lower than the industry standard of 10%+

— ZachXBT (@zachxbt) July 21, 2024

While the exchange is optimistic that some of the funds can be recovered, blockchain analytics firm Arkham confirmed that the hacker sold $102 million worth of SHIB, which was part of the stolen funds.

Speculations on WazirX exploit method

One X user offered an explanation of how the attack might have happened, implying that Shetty and the security team at WazirX were “asleep while all this happened.”

Let me explain WazirX Hack in a little more detail.

1. The attacker changed the contract that defines how the operations are performed. (How your key holders can upgrade the file without cross-checking it)

2. Once your keyholder 1 signs the first USDT transaction, attacker 1…

— Engineer Xplains (@engineer_inside) July 21, 2024

User X believes the hacker undetectedly changed the contract that defines transaction procedures. The attacker then reportedly captured signatures from three separate keyholders during the failed transactions.

These signatures were then used to create a test transaction that met Laminal’s approval criteria, paving the way for larger unauthorized transfers.

Shetty disagreed with the claims, claiming that Liminal’s security measures verify transaction authenticity and check whitelisted addresses before signing. He further said that Liminal only signs transactions initiated within its own system, not external ones, independent of other signatures.

The WazirX co-founder said that the exchange is currently waiting for Liminal’s detailed report on the incident and forensic analysis of the three WazirX devices involved in the incident.