Indian authorities have detained SK Masud Alam, a West Bengal native accused of being one of the hackers responsible for over $230 million hack of crypto exchange WazirX earlier this year.
According to the investigators, Alam had opened a fake account with the name Souvik Mondal and sold the account through Telegram to the hacker. The fraudulent account was allegedly at the centre of this attack, which locked many customers of WazirX out of their funds.
Indian Police Arrest Bengal Man for WazirX Hack
The arrest followed an investigation by the Special Cell and IFSO unit of Delhi Police. Alam allegedly sold the fake WazirX account to a buyer — M Hasan via Telegram after which Hasan used it and manipulated the exchange as noted in the chargesheet.
Law enforcement is also now investigating Alam’s connections, as the hack could be potentially linked to a larger conspiracy of hackers targeting cryptocurrency exchanges.
This investigation has put Liminal Custody, the crypto digital asset custody firm that was securing the wallets for WazirX, into question regarding their security practices. The Liminal Custody, however, did not cooperate with the authorities even after receiving several notices from the Delhi Police, the chargesheet stated.
The failure to comply with this has complicated the investigation, and police were quoted as saying that Liminal’s involvement in the case will be discussed in more detail in an additional chargesheet.
The absence of transparency from Liminal has only heightened security and accountability concerns about the protocol among crypto stakeholders.
The Investigation of the Delhi Police
Investigators also seized three laptops belonging to WazirX’s signatories needed for multi-signature wallet transactions to “better understand the hack.” The multi-signature wallets are crypto transaction security measures that require multiple keys to authorize transactions, a procedure the chargesheet says may have been bypassed in this instance.
On the other hand, WazirX has been fully transparent with authorities and provided them with all relevant information like KYC and records of transactions. WazirX has publicly mentioned attempting to recover the stolen funds and users who were affected.
The exchange promised to pay out bounties totalling $23 million for information leading to the recovery of the funds, offering an initial “community reward” of up to $10,000 worth of USDT for usable tips. The hacker has yet to contact authorities, and the money has still not been found despite these attempts.
The Recovery Road
At the latest, WazirX has now added a “rebalancing calculator,” designed to make sense of how much users will be compensated. However, the new tool has faced criticism among several users with claims that it contributes to confusion instead of clarity.
WazirX has reportedly partially refunded unaffected tokens which to some looks like a positive step, but others claim the exchange’s portfolio seems to have profited from this recent bull run. People are wondering why funds are still frozen on WazirX.
Critics of the new calculator have claimed that it is yet another tool to “confuse people & prove in court they are doing something…” according to quotes from Aditya Singh, co-founder of Crypto India.
The WazirX hack has hit India’s crypto community hard, and the exchange reportedly lost nearly 45% of its assets, sending a shockwave through its operations. For others, this incident highlights the urgent need for better cybersecurity within India’s cryptocurrency space as interest in digital assets swells.