The recent hack of India-based crypto exchange WazirX has raised significant concerns regarding the security measures implemented by the platform. Despite claims by multiparty computation (MPC) wallet provider Liminal that its infrastructure remained safe and was not compromised in the breach, the incident has exposed vulnerabilities that need to be addressed.
According to Liminal’s post-mortem report, the breach at WazirX was attributed to compromised devices within the exchange’s network. The report clarified that Liminal’s user interface (UI) was not responsible for the attack, contradicting earlier statements made by WazirX regarding discrepancies in data displayed on the UI.
Liminal explained that the breach occurred due to three compromised devices at WazirX, which allowed the attacker to exploit the multi-signature wallet system. By manipulating legitimate transaction details provided by the compromised devices, the attacker was able to initiate unauthorized transactions and transfer funds from the multisig wallet to their Ethereum account.
Despite claims by WazirX that its private keys were secured with hardware wallets, the breach highlights a failure in the platform’s security measures. The fact that the attacker could alter transaction hashes and extract signatures from failed transactions points to significant weaknesses in the exchange’s security protocols.
While Liminal’s post-mortem report sheds light on the sequence of events leading to the breach, critical questions remain unanswered. The report suggests that a sophisticated man-in-the-middle (MIM) attack or client-side compromise may have been responsible for the initial access gained by the attacker. WazirX has stated that it is pursuing additional legal actions and working with forensic experts to trace the stolen funds and recover customer assets.
The security breach at WazirX underscores the importance of robust security measures in the cryptocurrency industry. As digital assets become increasingly valuable targets for malicious actors, exchanges and wallet providers must prioritize security to protect customer funds and maintain trust in the ecosystem. The incident serves as a wake-up call for the industry to reevaluate security protocols and implement measures to prevent future breaches.