The Impact of Hacking on Crypto Exchanges

The Impact of Hacking on Crypto Exchanges

The recent security breach at the Indian crypto exchange WazirX has raised concerns in the industry. The hacker responsible for stealing over $235 million has transferred around $10 million through sanctioned Tornado Cash in the past 24 hours, according to blockchain security firm Cyvers.

Cyvers reported that the hacker had begun moving assets the previous day. So far, $10 million in Ethereum (ETH) has been laundered through Tornado Cash, including deposits of about $2 million in ETH. Market analysts have observed that the hacker’s laundering tactics resemble those employed by the North Korea-backed Lazarus Group.

Similarities to Lazarus Group

The Lazarus Group is reportedly behind more than $2 billion in crypto thefts and allegedly funds North Korean government activities. They often use Tornado Cash to obscure their transactions as part of a sophisticated laundering process, which sometimes involves chain-hopping.

These laundering activities come as WazirX announced an early withdrawal window for users to access 66% of their Indian rupee (INR) token balances. Initially set for Sept. 9, the exchange moved the withdrawal date forward, allowing users to access funds sooner.

Despite the early withdrawal window, some users expressed dissatisfaction with partial access and questioned when crypto withdrawals would resume. WazirX’s legal team has reportedly indicated that users might recover only 55% to 57% of their crypto holdings.

Meanwhile, the exchange has since filed for restructuring in Singapore to address its liabilities. The impact of the security breach on WazirX’s reputation and the trust of its users remains to be seen.

The hacking incident at WazirX highlights the ongoing challenges faced by crypto exchanges in securing their platforms and protecting user funds. It serves as a reminder of the importance of robust security measures and regulatory compliance in the crypto industry. Moving forward, exchanges must prioritize security to prevent similar incidents and maintain the trust of their users.

Exchanges

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