Delhi police arrest key suspect in $235 million WazirX crypto breach

Liminal criticized for non-cooperation in charge sheet as WazirX outlines recovery strategy for creditors.

Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.

Delhi Police have made progress in investigating the $235 million breach of crypto exchange WazirX by arresting SK Masud Alam from Bengal.

On Nov. 13, local media outlet IndiaToday reported that Alam allegedly set up a fake account on WazirX under the alias “Souvik Mondal.” He reportedly sold this account via Telegram to a person identified as M. Hasan, who then used it to carry out the exploit.

As part of the investigation, authorities have confiscated three laptops belonging to WazirX’s authorized signatories to examine possible misuse of multisig wallets.

The charge sheet reveals that WazirX has been fully cooperative in providing detailed KYC data and transaction records. However, an inspection by the Indian Cyber Crime Coordination Centre (IFSO) found no evidence of unauthorized access within WazirX’s internal systems.

In contrast, authorities report difficulties working with Liminal, the digital asset custody provider initially responsible for securing WazirX’s wallets.

Police claim that despite repeated requests, Liminal failed to supply relevant information, hindering their ability to trace the breach fully. As a result, Liminal’s alleged lack of cooperation will be highlighted in a supplementary charge sheet as the investigation continues.

WazirX and Liminal had previously traded blame over the breach. The exchange asserted that Liminal failed to uphold security standards, while the asset custodian faulted WazirX’s management practices.

Fund recovery initiatives

This development comes around a week after the exchange outlined strategies to maximize fund recovery for its creditors.

The first step involves reopening the trading platform to restore trading volumes and generate revenue that benefits creditors. WazirX plans to share fees collected during this period with creditors, creating a direct pathway for financial recovery.

The second initiative would see WazirX diversify its revenue streams by launching new services, including a decentralized exchange (DEX), staking, an over-the-counter (OTC) desk, and futures trading.

These services would be designed to attract users to the platform, and the revenue would also be aimed at making the platform whole.

Meanwhile, WazirX has also committed to recovering lost and illiquid assets through legal channels. The exchange aims to reclaim these assets to safeguard them for its creditors. The firm stated:

“This process includes tracking these assets and preventing unauthorized withdrawals to maximize potential returns for Creditors.”

The final part of WazirX’s recovery strategy involves exploring “White Knight” partnerships, where potential investors could provide rescue financing. This approach would introduce new funds into the recovery process, supporting WazirX’s efforts to compensate creditors and stabilize operations.

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