In response to the recent $230 million security breach at WazirX, the Bharat Web3 Association (BWA) is intensifying efforts to bolster cybersecurity and improve consumer protection in India’s crypto industry.
BWA Establishes Cybersecurity and Consumer Protection Teams
Chaired by Dilip Chenoy, the BWA has formed two dedicated internal groups to address these critical issues and investigate the security breach. One group will focus on developing standard operating procedures (SOPs) and solutions to prevent future breaches. This team will comprise chief information security officers (CISOs) from member firms. The second group will focus on updating consumer protection guidelines and safeguarding user interests.
Chenoy emphasized that the BWA is conducting a thorough investigation into the breach, maintaining regular communication with the affected parties, WazirX and Liminal. “We have asked both [WazirX and Liminal] to do a complete forensic analysis and root cause analysis on the issue and evaluate the legal and remedial actions that can be taken post this incident.” The BWA has also suggested a third-party evaluation of the forensic report to ensure an impartial review.
Shift Towards Cybersecurity Emphasis
Traditionally, the BWA has focused on regulatory compliance, including registering with the Financial Intelligence Unit and implementing anti-money laundering measures. However, this recent incident has highlighted the need for a greater emphasis on cybersecurity. The association, which includes major players such as Coinbase, Polygon, CoinSwitch, Liminal, Biconomy, Tax Nodes, Giottus, and Hike, will now also involve WazirX’s local rival, CoinDCX, in its newly established groups.
Details of the WazirX Hack
On July 18, WazirX, India’s largest cryptocurrency exchange, lost 45% of its holding assets after one of its multisig wallets was hacked. North Korea’s Lazarus Group allegedly conducted the attack in a state-sponsored cyberattack. Multisig wallets require two or more private keys to unlock and withdraw funds, making the breach particularly concerning.
Chenoy noted, “We have advised our members to be extra vigilant around cybersecurity. We have agreed on having independent discussions with cyber experts as well as within our ecosystem to strengthen the industry from threats.” The exchange is also cooperating with various government agencies. WazirX’s founder and CEO, Nischal Shetty, announced that the exchange has submitted its records to CERT-In and is in ongoing contact with the FIU and regulators. Shetty emphasized that the government agencies understand WazirX was a victim of a planned hack.
Financial Impact and Recovery Plan
The stolen assets, valued at $230 million, included $102 million in Shiba Inu, $52.5 million in Ethereum, $11.24 million in Matic, $7.6 million in Pepe coin, $135 million in Tether, and $3.5 million in Gala, according to Lookonchain. In response, WazirX has temporarily suspended withdrawals and trading. On July 27, it proposed a recovery plan allowing customers to access and trade 55% of their portfolio tokens, with the remaining 45% converted to USDT and locked. This proposal is open for customer voting until August 3.
The BWA’s proactive steps aim to enhance the resilience of India’s crypto ecosystem against such attacks and safeguard consumer interests.
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