Indian Police Arrest Suspect in $230 Million WazirX Hack Amidst Customer Outrage Over Frozen Funds

Indian police have arrested SK Masud Alam, a resident of West Bengal. He’s linked to the WazirX hack that caused losses over $230 million in cryptocurrency earlier this year. Customers have struggled to withdraw their funds since the incident.

Alam allegedly created a fake account under the name Souvik Mondal. He sold this account via Telegram to the hacker, who then used it to exploit the crypto exchange.

Local reports indicate that the police chargesheet points to a lack of cooperation from Liminal Custody. This firm is responsible for securing WazirX’s digital wallets. Despite multiple requests, Liminal did not provide crucial information. This raises serious concerns about their security practices.

The hack occurred on July 18. It targeted a multi-signature wallet with six signatories: five from WazirX and one from Liminal. As a result, nearly 45% of WazirX’s stored assets were lost.

In response, the exchange launched a recovery plan ten days later. They aimed to return 55% of affected users’ holdings. The remaining 45% would be issued in USDT-equivalent tokens, leaving users with locked assets.

WazirX also offered a $23 million bounty to encourage the recovery of stolen funds. They even announced a $10,000 reward in USDT for anyone providing actionable intelligence. However, the hacker has yet to reach out.

For months, WazirX customers have expressed frustration. They can’t access their locked assets, and this frustration has turned into outrage recently. The crypto market is experiencing one of its biggest bull runs of the year.

Affected users are unable to liquidate their assets as prices keep rising. They risk missing out on significant profits.

“The bull run is here, but WazirX users can only watch. The market is up over 50% since the hack. $BTC is hitting a 90k ATH, but what’s the point when funds are frozen?” wrote Indian crypto researcher Budhil Vyas in a post.

Recently, WazirX introduced a ‘rebalancing calculator’ to help affected users understand their credits. However, many users have raised concerns about this calculator.

Some users pointed out that WazirX is partially refunding tokens that were not affected by the hack. Others noted that the exchange’s portfolio has surged significantly in the current bull market, even recovering the entire loss from the hack. Yet, user funds remain frozen.

“It seems WazirX created the rebalancing calculator just to confuse people and prove to the court that they are doing something. WazirX has a habit of complicating simple things,” said Aditya Singh, co-founder of Crypto India.

Overall, users are frustrated with the exchange’s fund recovery plans. Crypto hacks have become a persistent issue this year. Just last month, blockchain lender Radiant Capital suffered a $50 million breach. Hackers have also targeted U.S. government crypto wallets, stealing nearly $20 million in recent months.