Key Takeaways
- The July 2024 hack resulted in the theft of over $230 million from a multisig wallet managed by WazirX and Liminal.
- Independent forensic reviews cleared both WazirX and Liminal’s infrastructure, with Mandiant investigating WazirX and Grant Thornton reviewing Liminal. Both firms found no direct evidence of compromise in their respective systems.
- Liminal today received a clean chit from Grant Thornton, affirming that the hack did not originate from their frontend or backend systems, placing the security onus back on WazirX.
In a high-profile debacle that has shaken India’s cryptocurrency ecosystem, WazirX, a prominent exchange, found itself at the center of controversy in July 2024 after suffering a major security breach. On July 18, over $230 million in cryptocurrency was siphoned from one of the exchange’s multisignature wallets, sparking a chain reaction of finger-pointing and an exhaustive investigation.
The Hack and Initial Blame
The breach, which impacted one of WazirX’s multisig wallets jointly managed with digital asset custodian Liminal, set off alarms across the crypto community. Both WazirX and Liminal quickly entered a public blame game, each accusing the other of responsibility for the attack.
WazirX pointed to discrepancies in the data displayed on Liminal’s platform, claiming that the displayed transaction details did not match the actual transactions processed. Liminal, on the other hand, suggested the breach was the result of compromised WazirX devices, raising questions about whether the exchange’s systems had been infiltrated to manipulate transaction records.
This divide left many in the crypto world uncertain about who should bear the brunt of the blame. The stakes were high, with trust in custodial services and exchange security hanging in the balance.
Forensic Investigations Deepen the Divide
As pressure mounted, both companies turned to third-party forensic experts to investigate the root cause of the hack. WazirX enlisted Mandiant, a subsidiary of Google specializing in cybersecurity, to assess whether its internal systems had been compromised. Mandiant’s report reportedly cleared WazirX’s systems, finding no evidence that the exchange’s devices or infrastructure had been breached.
Meanwhile, Liminal initiated its own forensic review with Grant Thornton, a globally ranked audit firm, to evaluate whether the hack could have originated within its infrastructure. In a report released today, Grant Thornton affirmed that Liminal’s front-end, back-end, and user interface infrastructure remained uncompromised. The firm’s comprehensive audit found no vulnerabilities within Liminal’s systems that could have led to the breach.
Liminal’s official statement emphasized that its role in the custodial arrangement was limited, reiterating that WazirX retained the majority of the private keys controlling the affected wallet. Transactions, Liminal noted, always originate from the client’s infrastructure, placing the onus of security primarily on WazirX.
Security Questions Linger
The conclusions of both forensic reports, while exonerating each party’s own systems, leave the broader crypto community with unresolved questions. The hack, after all, occurred— and $230 million in assets remain missing.
WazirX and Liminal’s mutual finger-pointing underscores the growing complexity of managing multi-signature wallets and the difficulty of assigning accountability in a landscape where security risks are dispersed across various custodians, infrastructure providers, and end-users. Multisig wallets are designed to mitigate risk by requiring multiple signatures to authorize transactions, but this incident illustrates that even such safeguards can fall victim to sophisticated attacks.
For WazirX, the stakes are particularly high. The exchange operates in a market where regulatory scrutiny of crypto assets is already fierce, and any hint of vulnerability could erode customer trust. The exchange has yet to disclose further details about what steps it will take to enhance its security measures in the wake of the breach.
Implications for Crypto Custody
Liminal’s clean bill of health from Grant Thornton may alleviate concerns for some, but the hack has reignited debates about the safety of custodial wallets in the crypto space. Custodians like Liminal play a critical role in securing digital assets, especially as the sector looks to bridge the gap between decentralized technologies and traditional finance.
However, this incident highlights the thin line between shared responsibility and diffused accountability. As custodial services become increasingly essential, the relationship between exchanges and custody providers will likely face more scrutiny. Trust, in this case, is not just about securing infrastructure but also about the transparency and coordination between partners when things go wrong.
As the WazirX-Liminal saga unfolds, it serves as a cautionary tale for the broader crypto ecosystem: no single layer of defense is sufficient in the complex world of digital assets, and when vulnerabilities arise, it can be difficult to pin down where the fault truly lies.
For now, WazirX and Liminal will have to continue navigating the fallout of the July breach. Both have a long road ahead to rebuild trust with their users, who will likely remain wary of security assurances from either party.
Read Also: India Edges Closer to Cryptocurrency Regulation Amid WazirX $230M Hack
