WazirX has been under pressure from various government arms after a severe data theft incident in July, during which it lost around ₹2,000 crore ($234 million). This has affected millions of its users, primarily from India, who are now waiting to get back their stolen virtual possessions.
Law enforcement agencies, including the Financial Intelligence Unit (FIU), the Indian Computer Emergency Response Team (CERT-In), and other agencies, have had meetings with WazirX's senior leadership regarding the theft of the crypto tokens. These probes seek to analyze the details of the hack and come up with approaches to prevent similar occurrences in the future so as to enhance a 'strong guard' for the digital assets sector.
The probe by government entities is multifaceted, focusing on the technical aspects handled by CERT-In and the financial transactions overseen by the FIU. The agencies have demanded that WazirX provide information such as server and laptop logs, transaction histories, and the hack's blockchain addresses.
Hackers have begun to transfer stolen digital assets using Tornado Cash, a decentralized cryptocurrency mixer platform.This platform complicates the traceability of transactions, presenting additional challenges for the authorities in tracking the stolen funds. The ongoing withdrawals by the hackers accentuate the urgent need for advanced technological solutions and international cooperation in tackling such sophisticated cybercrimes.
Following the cyber theft, WazirX acknowledged that nearly 43% of its user base is at risk of losing their investments in digital assets. This revelation has not only heightened user anxiety but has also sparked a broader discussion about the security measures deployed by crypto exchanges.
Moreover, the exchange's decision to make a private YouTube town hall session video, which had promised to share "100% of future crypto price appreciation profits with users," has raised concerns about transparency and accountability in managing the aftermath of the hack.
The meetings between WazirX executives and government officials are part of ongoing efforts to thoroughly investigate and address the significant vulnerabilities exposed by the incident.
As the inquiry continues, both the crypto industry and regulatory bodies are keenly observing the outcomes, which are expected to set precedents for regulatory frameworks and security protocols within India's digital asset markets.