WazirX hacker nears final stages of laundering $230M in stolen funds

1 month ago 20

India’s largest cryptocurrency hack has neared completion, with over $230 million worth of stolen tokens almost fully laundered, according to blockchain data.

The hack, targeting WazirX, once one of India’s leading exchanges, resulted in a massive breach of funds in July.

The hacker behind the breach has been using sophisticated methods to move the stolen tokens, with most of the funds now routed through privacy tools like Tornado Cash.

Stolen funds nearly depleted

The wallet holding the funds from the WazirX hack now holds only $6 million worth of Ether (ETH), marking a significant depletion of the stolen assets.

The hacker, who initially managed to drain over $230 million in tokens, has been moving the funds through multiple wallets, making detection and recovery harder.

Blockchain analysis from Arkham has shown that the stolen tokens have been regularly moved to new addresses before being transferred to Tornado Cash, a tool used to mask transaction history.

Source: Arkham

Hacker moved $50 million in August, stepped up in September

On-chain data shows that the hacker increased their activity in recent weeks. In August alone, they laundered $50 million worth of tokens through Tornado Cash.

The hacker’s efforts intensified in September, with a $10 million transfer of 3,792 ETH to an unidentified wallet early this Wednesday.

These movements demonstrate the hacker’s ongoing attempts to clean the trail of stolen tokens by using Tornado Cash, which provides privacy features for users looking to anonymise their transactions.

Tornado Cash under scrutiny for aiding criminal activities

Tornado Cash is a privacy service designed to help crypto users mask wallet addresses.

While not inherently illegal, the service has gained a reputation for being used by criminals to hide the origins of stolen funds.

Tornado Cash’s role in money laundering has been brought into focus following the guilty verdict of its developer, Alexey Pertsev, who was convicted of money laundering in the Netherlands and sentenced to 64 months in prison.

The service’s use in the WazirX hack adds to the growing list of incidents where it has been utilised for illegal purposes.

$100 million in SHIB and $52 million in ETH among stolen assets

The security breach in WazirX’s multisig wallet led to a loss of over $100 million in Shiba Inu (SHIB) and $52 million in Ether, among other tokens.

This breach accounted for more than 45% of the exchange’s total reserves, as cited in a June 2024 report.

The loss of these assets has severely impacted WazirX’s ability to operate effectively, with the exchange entering a restructuring process in Singapore to mitigate the damage caused by the hack.

WazirX faces backlash for handling of the crisis

WazirX has faced significant criticism for its handling of the security breach.

Users have expressed frustration over the exchange’s lack of communication during the incident and its slow recovery process for the stolen funds.

WazirX’s response has been widely seen as insufficient, particularly regarding efforts to regain the lost assets and restore confidence among its user base.

Despite engaging in fund recovery efforts, the exchange has made little progress, further tarnishing its reputation.

Binance distances itself from WazirX after breach

Binance, the world’s largest cryptocurrency exchange, was dragged into the controversy after confusion surrounding its relationship with WazirX. In August, WazirX’s founder Nischal Shetty claimed on X (formerly Twitter) that Binance had involvement with the exchange.

Binance quickly refuted these claims, stating that it does not control or operate WazirX.

This clarification has further complicated the situation, leaving WazirX to bear the full brunt of the hack’s financial and reputational consequences.