WazirX shifts funds to new multisig wallets, cuts ties with Liminal after $230m hack

Indian cryptocurrency exchange WazirX, which was hit with a $230 million hack in July, announced that it is moving customer funds to new multi-signature wallets and ending its relationship with crypto custody provider Liminal.

The exchange notified its customers in an X post on August 14, saying that it had moved its remaining assets from Liminal to new multi-signature wallets to ensure “maximum security.”

👋 Tribe! We would like to inform you about the measures we have taken to protect crypto assets on the exchange.

We are in the process of migrating the remaining assets held in Liminal to new multisig wallets. This step is important to ensure maximum security of the assets… picture.twitter.com/3C8ort5P7D

— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) August 14, 2024

In a post-mortem report published shortly after the attack, the Mumbai-based exchange explained that its multi-signature wallets required a set of signatures from three people on its team and crypto custody provider Liminal to verify a transaction.

However, according to the exchange, attackers were able to seize control of the wallet by exploiting a discrepancy between the data displayed in Liminal’s interface and the data actually involved in a transaction.

The attackers then stole over $230 million in various cryptocurrencies, including Ethereum (ETH), Shiba Inu (SHIB), Polygon (MATIC), and Pepe (PEPE). The lower tokens were converted to ETH, bringing the total proceeds to over 59,000 ETH.

The attack limited the exchange’s ability to hold 1:1 collateral with its assets and forced it to halt both crypto and fiat withdrawals.

Liminal later clarified that its infrastructure had not been breached and that all wallets in its custody, including those belonging to WazirX, were safe.

However, in its latest update, WazirX maintained its stance that Liminal’s systems and interface were compromised in the July 18 exploit and therefore required action. However, it did not give an exact timeline for when the wallet migration would be completed, only stating that it would publish a list of all new addresses once it completes the exercise.

Following the attack, WazirX attempted to implement a “socialized churn strategy” that would see users access 55% of their funds, with the remaining 45% held in Tether (USDT)-equivalent tokens on the exchange.

However, the proposal was met with widespread outrage, with users accusing the exchange of trying to avoid taking full responsibility for losses caused by the attack. Later, WazirX was forced to back down from the plan and asked for more time to work on a solution.