The Indian cryptocurrency exchange, WazirX, has started allowing INR (Indian Rupee) withdrawals after a cyberattack in July, that led to the theft of over 2,000 crore rupees ($230 million). The platform's first phase of withdrawals began on August 26, allowing users to withdraw up to 33% of their INR balances. This initiative comes as a part of WazirX’s effort to rebuild trust and provide access to funds during challenging times.

Key Highlights: A Step-by-Step Approach to Withdrawal

Starting August 26, WazirX users can withdraw up to 33% of their INR holdings until September 8.
The second phase, from September 9 to 22, will allow the full withdrawal of the remaining 66% balance.
To further support their user base, WazirX has slashed the withdrawal fees by 60%, reducing costs from INR 25 ($0.29) to INR 10 ($0.12).

This reduction aims to ease the financial burden on users during these uncertain times.

What Led to This Situation? A Recap of the Hack

On July 18, a major breach was detected in WazirX’s Safe Multisig Ethereum wallet. Hackers managed to move $234.9 million in funds to another address via Tornado Cash, a tool known for privacy-focused transactions. Upon discovering the suspicious activity, WazirX promptly announced the breach and temporarily halted all INR and cryptocurrency withdrawals. The affected wallet was managed with Liminal's digital storage infrastructure, utilizing multiple signatories for security. A discrepancy in Liminal's transaction data allowed hackers to gain unauthorized access. While WazirX immediately initiated an investigation, it also took steps to safeguard user assets.

Community Support and the Road to Recovery

Following the breach, WazirX launched a comprehensive plan to track and recover stolen assets. They worked closely with over 500 global exchanges and collaborated with forensic experts and law enforcement agencies. Additionally, the team filed complaints with the Financial Intelligence Unit (FIU) and other authorities. To further engage the community, WazirX introduced a bounty program offering up to $23 million in rewards for those who help recover the stolen funds. Community members were encouraged to assist in tracking and blocking the stolen assets.

Looking Forward: Rebuilding Trust and Regulatory Changes

While withdrawals have resumed partially, the road to complete recovery is still uncertain. WazirX has announced plans to seek a restructuring process under Singapore's bankruptcy laws, which requires approval from creditors. Meanwhile, the Indian government is also stepping up its efforts to regulate the crypto sector, preparing a consultation paper to address the sector's challenges and establish a clear regulatory framework.

An Eye on Security: Lessons from the Incident

The WazirX hack has been a wake-up call, highlighting the vulnerabilities even in established crypto platforms. However, it also underscores the importance of transparency, community engagement, and strong partnerships in navigating such crises. As users slowly regain access to their funds, the lessons learned from this incident will likely shape the future of the crypto ecosystem in India and beyond.

Signing Off:

A Constructive Path Ahead While the WazirX hack has undoubtedly shaken the Indian cryptocurrency landscape, it also offers a chance to strengthen security measures and improve regulatory frameworks. The steps taken by WazirX and the proactive stance of the Indian government suggest a constructive path forward. As the crypto community continues to adapt, these measures could help restore confidence and protect investors in the long run. WazirX's commitment to transparency and collaboration with global partners is a positive sign for the future, but questions about crypto withdrawals and the status of frozen funds still remain.

WazirX Enables INR Withdrawals Following $230 Million Hack