- WazirX and Liminal Custody clash over responsibility for Rs 2000 crore hack, raising serious security concerns.
- Liminal questions WazirX’s security, stressing that they held 5 of 6 keys in the Rs 2000 crore hack.
- WazirX scraps its controversial 55/45 loss mitigation plan after investor backlash, deepening trust issues.
A cyberattack that cost Rs 2000 crore on July 18 has led to a tense dispute between WazirX and Liminal Custody, the former security partners. WazirX, the top bitcoin exchange in India, blamed Liminal Custody for the event. But Liminal struck back, questioning the exchange’s security and operational structure.
The Blame Game: WazirX vs. Liminal Custody
WazirX had claimed that a third-party forensic audit found no breach on their end, suggesting that the fault lay with Liminal. However, Liminal dismissed these claims, stating they lacked information on the scope and methodology of the audit.
They further raised concerns about WazirX’s network infrastructure and custody controls. Moreover, Liminal emphasized that WazirX held five of the six keys involved in the hack, shifting scrutiny back onto the exchange.
In their defence, Liminal asserted that their internal audit revealed no breach in their user interface (UI) or front-end systems. They also stated that they had engaged multiple independent auditors for a thorough forensic analysis, with reports expected within the week.
Moreover, they invited WazirX to involve Mandiant in the audit, showcasing their commitment to transparency. Consequently, Liminal remains confident that its systems were not compromised during the cyber attack.
Investor Fallout and Mitigation Efforts
The fallout from the hack has left thousands of investors anxious. WazirX initially proposed a controversial “55/45 approach” to mitigate losses, allowing users to trade 55% of their portfolios while locking the remaining 45% as USDT.
However, resistance forced the abandonment of this idea. Instead of handling the fallout from the attack alone, WazirX has joined together with the Indian Computer Emergency Response Team (CERT) and the Financial Intelligence Unit of India (FIU).
Following the event, WazirX broke off communication with Liminal Custody. Additionally, the exchange restored balances by undoing all trades between July 18 and July 21, as they failed to block unauthorized transactions during that period.
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