Officials from government agencies such as the Financial Intelligence Unit (FIU), Intelligence Bureau (IB), and the Indian Computer Emergency Response Team (CERT-In) met with the founders of the hacked cryptocurrency exchange WazirX over the past few weeks, seeking information on the illegal transfer of crypto tokens from its wallets on July 18, an industry source told Moneycontrol.
The company has also checked for the possibility of an inside job, but no foul play has been detected as of now.
A team of eight to ten officials from the agencies interacted with the WazirX executives at its Mumbai office to figure out how tokens worth $235 million were moved to the hackers, the source said.
FIU, which comes under the finance ministry, is the national agency responsible for processing and analysing suspect financial transactions. The IB under the home ministry is tasked to review the security and counterintelligence aspects, while CERT-In, as a nodal agency dealing with cybersecurity threats under the electronics and IT ministry, looks into the technical side of cybercrimes.
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WazirX reportedly has provided details on server and laptop logs, transaction trails, and the blockchain addresses linked to the hacking.
While there has been no confiscation of physical assets such as laptops, there have been multiple meetings and the exchange is working with the government and providing regular updates to the agencies.
Agencies like FIU have also reached out to some of the crypto industry stakeholders, especially after the WazirX hack. “The government is concerned about the size of the illegal transfer in WazirX as it impacts retail investors. The government agencies have reached out for some data to understand the structure, how does the transfers happen and liquidity, etc. The hack happened because there are grey areas as the sector is unregulated," another source aware of the development told Moneycontrol.
Leading crypto exchange WazirX, which has around 1.5 crore investors, faced a cyberattack on July 18, which led to a theft of $235 million that was stolen from its Ethereum Wallet. The exchange lost nearly 45 percent of its holding assets in the hack.
To restructure the crypto liabilities of the platform, Singapore’s Zettai Pte, which runs the cryptocurrency platform WazirX, filed a moratorium application in Singapore and the plea was granted a few days ago. A four-month moratorium period was recently granted by the Singapore court, which means no coercive legal action could be taken against the exchange during this time.
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Zemnai, parent of WazirX is the Indian entity and Zettai is the Singapore entity. Zenmai looks after the INR-part and Zettai looks after the crypto part of the business.
During the moratorium period, WazirX will focus on publicly disclosing wallet addresses through a court affidavit, respond to user queries raised during court proceedings, and release its financial information.
The exchange, meanwhile, is in the process of setting up a 10-member committee of creditors (CoC) by October 9 to advise and provide feedback to the exchanges on its business restructuring plan. It hopes to return 52-55 percent of the crypto assets left on its book after the hack back to its clients within the next six months.
Singapore’s Zettai Pte Ltd has, in the mean time, made some progress in discussion with 11 crypto exchanges and trading businesses that could be potential white knights. The company has received three preliminary proposals from large cryptocurrency exchanges with millions of users. The three proposals incorporate elements aimed at improving user recoveries such as capital injections, platform token distributions, AirDrops, and profit-sharing of revenue- generating initiatives.
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The exchange is also working with zeroShadow, a web3 security solutions provider, and Kroll, a financial and risk advisory firm, to trace assets, understand the likelihood of recovery and propose the next steps for recovery.
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