In the crypto world, where fortunes can flip,
Stay sharp and secure, don’t let your assets slip.
The WazirX hack of July 18, 2024, alleged by the notorious Lazarus Group from North Korea has shaken the crypto community, exposing critical vulnerabilities in even the most established platforms.
This blog explores the details of the breach, its impact on users, and offers practical advice on protecting digital assets.
We’ll guide you through the responses from WazirX, the legal avenues available for affected users, and key steps to enhance your security in the cryptocurrency world.
How Safe is Your Crypto? Lessons from the WazirX Hack
In the fast-paced world of cryptocurrency, security is paramount. The recent breach of WazirX, one of India’s leading cryptocurrency exchanges, has sent shockwaves through the crypto community, raising serious concerns about the safety of digital assets.
If you’re too in the crypto world, you’ve probably heard about the recent WazirX hack. It’s a big deal, and it’s got everyone asking the same question: “How safe is my crypto?”. This incident serves as a critical reminder of the vulnerabilities inherent in even the most robust platforms and underscores the importance of proactive security measures.
Let’s see what happened, how it affects you, and what you can do to protect your hard-earned digital assets.
What Really Happened at WazirX?
On July 18, 2024, WazirX, a popular cryptocurrency exchange, announced that it had been hacked by the Lazarus Group, a notorious hacking collective believed to be based in North Korea.
According to WazirX, the hackers infiltrated user accounts and stole a significant portion—more than 45%—of the platform’s digital assets, including popular cryptocurrencies like SHIB, ETH, and MATIC as reported.
The attackers reportedly exploited vulnerabilities in WazirX’s security infrastructure, bypassing multiple layers of protection, including a multi-signature wallet that typically requires several approvals before transactions can proceed. However, given that WazirX itself disclosed the breach, there is some skepticism among users and industry observers. It’s unclear whether this announcement reflects the true extent of the hack or if the incident was possibly framed to deflect from other underlying issues within the platform.
How Did WazirX Respond?
In response to the attack, WazirX engaged Cyfirma, a Singapore-based cybersecurity firm, to analyze the breach through ethical hacking and reverse engineering. Their findings highlighted critical security deficiencies within WazirX’s platform, which had been expertly exploited by the Lazarus Group. The breach not only led to substantial financial losses but also shook the confidence of users and investors in the platform’s security measures.
In a bid to contain the situation, WazirX temporarily halted the withdrawal of both INR and crypto assets. This sudden freeze not only exacerbated users’ frustrations but also led to significant stop losses as traders and investors were unable to access or move their funds during critical market movements. This action further compounded the financial impact on users, deepening the sense of distrust and uncertainty surrounding the platform.
One way to enhance security is by using Multi-Party Computation (MPC) wallets, which split cryptographic keys into multiple parts distributed across different locations. This method minimizes the risk of a single point of failure, making it harder for hackers to gain unauthorized access to your funds. Another option is self-custodial wallets, where you control your private keys, offering a higher level of security but requiring more responsibility on your part.
WazirX has implemented MPC wallets to store seed phrases and recovery keys, which are secured under strong encryption. However, the recent breach has highlighted that even these advanced measures may not be foolproof. Therefore, it’s crucial to stay vigilant and consider additional layers of protection to safeguard your hard-earned digital assets.
To add to the concerns, users are still awaiting responses from WazirX. Despite their increasing unease, clear communication has been lacking, which has amplified the sense of uncertainty. This has left users feeling unsupported and more anxious about the safety and recovery of their assets.
Feeling the Pain: What WazirX Users Are Going Through
Our team conducted a survey with WazirX users through a telegram group and uncovered several critical pain points that have emerged in the aftermath of the hack.
The breach has left users struggling with a range of issues, each contributing to their frustration, distrust, and anxiety. The data collected in the survey has been kept confidential to protect user privacy.
Below are some of the most pressing concerns shared by affected users:
Inability to Withdraw Funds
Many users have been unable to withdraw their own money for almost 20 days now. Despite repeated attempts to withdraw funds, including efforts made months before the hack, users have been blocked from accessing their assets. One user mentioned having both INR and cryptocurrency stuck in two different WazirX accounts, with the company not allowing any withdrawals or transfers of any kind.
Unauthorized Sale of Assets
There are reports of WazirX selling portions of users’ portfolios—up to 45%—without their consent. This action, combined with the prolonged holding of funds, has led to deep frustration. Users have expressed that, at this point, they simply want all of their invested money returned.
Life Savings at Risk
Some users invested their entire life savings in WazirX, placing their trust in the platform largely because it is an Indian exchange. They believed that their investments would be safer with a homegrown company. However, post-hack, they have been unable to withdraw their funds and have not received transparent communication about what will happen next or what the company’s current holdings are. This lack of clarity has only deepened the anxiety and uncertainty felt by those affected, as many now question the reliability of a platform they once trusted with their financial future.
Frozen Crypto Assets
Numerous users are reporting that their crypto assets are stuck on the platform, and they have been given no clear indication of when or if they will be able to regain access to their funds. Furthermore, despite WazirX highlighting specific cryptocurrencies like SHIB, ETH, and MATIC being affected, all other currencies on the platform have also been frozen. This indiscriminate freezing of assets has been viewed as unfair for many users, who believe that those unaffected by the hack should still have access to their funds. This blanket approach has only intensified the frustration and distrust among the broader user base.
Limited Disclosure
The landscape surrounding these issues is murky, adding to the stress of users who are unsure of their rights or the steps they should take to recover their assets. The lack of clear communication from WazirX has only deepened this sense of uncertainty.
Understanding Your Legal Options: Lessons from Recent Crypto Security Breaches
If you’ve been affected by the WazirX hack, it’s time to consider your legal options:
Arbitration at SIAC: Arbitration at SIAC
WazirX’s End User License Agreement (EULA) includes an arbitration clause that directs disputes to the Singapore International Arbitration Centre (SIAC). While arbitration at SIAC is a possible route for users seeking redress, it’s important to note that the clause specifies Singapore as the seat and venue for proceedings. This can impose a significant financial burden on users, with costs including travel and legal fees. Such clauses are common among large corporations offering online products or services, as they often prefer arbitration for its perceived neutrality. However, it’s crucial to remember that consumer redressal commissions in India offer an alternative that is typically more considerate towards consumers, providing a potentially less burdensome path for those seeking justice.
Complaint Before the NCDRC
As per Section 15 of the Code of Civil Procedure, 1908, every suit shall be instituted in the court of the lowest grade competent to try it. With this in mind, you can file a complaint with the National Consumer Disputes Redressal Commission (NCDRC) under the Consumer Protection Act, 2019. If the total value of your assets is over INR 10 crores, this might be your best bet for seeking compensation.
The steps to take action include:
- Unite with Other Affected Users: Gather 20-25 other people who are suffering from the same cause. This collective action is crucial to get pecuniary jurisdiction over cases where the value of the goods or services and the compensation claim exceeds INR 10,00,00,000 (Rupees Ten Crores).
- Hire a Common Associate: Engage a legal associate or advocate who can represent the group. This step ensures that your case is handled efficiently and professionally, with a unified approach.
- Draft the Complaint: Work with the legal associate to properly draft the complaint. This includes gathering all necessary documentation, detailing your grievances, and getting approval from all the involved users before finalizing the complaint.
- File the Complaint: If WazirX doesn’t respond or doesn’t take satisfactory action, the next step is to file the complaint with the NCDRC. Ensure all the documentation is organized and ready for submission before the court.
- Public Interest Litigation (PIL) or Writ Petition: Technically, you could take this to the Supreme Court, but unless a lot of users come together, this isn’t the most practical route.
Legal Research
Our team is already actively working on these specific steps, collaborating with many people across diverse sectors to study the situation for better understanding. If you are among the aggrieved users and wish to join this collective effort, we encourage you to reach out to us through our website. We are here to support you in seeking justice and recovering your assets.
Takeaways: Protecting Your Crypto Moving Forward
The WazirX hack is a wake-up call for everyone in crypto space. These point have to be kept in mind
- Do Your Homework: Always make sure the platform you’re using has top-notch security measures. Don’t just assume everything is safe—check for yourself.
- Stay Updated: Keep an eye on the latest security news and threats. The more you know, the better you can protect yourself.
- Diversify Your Assets: Don’t put all your crypto in one basket. Spread it out across different platforms to reduce your risk.
Legal Guidance for Wazirx Users
Navigating the legal landscape can be complex, especially when it involves your financial assets. Understanding your rights and the options available—whether it’s filing a complaint, pursuing arbitration, or simply seeking clarity—is crucial. By staying informed and aware of best practices, you can better protect your crypto assets.
For more insights and resources, explore our website or consider seeking personalized legal advice from a trusted professional.
Conclusion
The WazirX breach is a good case study. It is also a chance to learn more about consumer laws and how we protect our digital assets. By staying informed, taking the right legal steps, and being proactive, we can navigate these challenges and keep our investments as safe as possible in this ever-evolving landscape.
Stay safe out there, and when it comes to your crypto, trust but verify.
Remember, our team is here to assist you. Feel free to contact us for further help or any questions you may have.
