WazirX, a leading Indian exchange, suffers $230 million hack: Previously cut off by Binance over money laundering allegations, annual trading volume drops 90%
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WazirX, a leading Indian exchange, suffers $230 million hack: Previously cut off by Binance over money laundering allegations, annual trading volume drops 90%
Nearly half of its reserve funds stolen, and after a fallout with Binance over ownership, WazirX sees over 90% decline in annual trading volume.
Navigating Web3 tides with focused insightsAuthor: Nancy, PANews
Two years ago, WazirX drew market attention due to a prolonged acquisition dispute with Binance. Today, the Indian cryptocurrency exchange is once again under public scrutiny—this time over the theft of $230 million in assets, reigniting interest in the development of India’s crypto market.
Nearly Half of Reserves Stolen; White-Hat Bounty Program Launched
On July 18, WazirX suffered a security breach in its multi-signature wallet, resulting in the theft of $230 million worth of crypto assets—nearly half of which were SHIB tokens. According to WazirX’s June transparency report, the exchange held $503 million in assets, meaning the incident wiped out over 45% of its reserves.
The following day, WazirX released preliminary findings, stating that since February 2023, it had been using Liminal's digital asset custody and wallet infrastructure services. The attack originated from a discrepancy between data displayed on Liminal’s interface and the actual transaction content. During the attack, the information shown on Liminal’s platform did not match what was actually signed. WazirX thus suspects that the payload was altered to transfer wallet control to the attacker.
In response to WazirX’s accusations, Liminal Custody refused to take responsibility. Liminal stated that its infrastructure remained uncompromised and all wallets—including WazirX’s—were secure. Unfortunately, malicious code was injected through three compromised machines during transactions, indicating a sophisticated, targeted attack on a Gnosis smart contract multi-sig wallet. Blockchain analytics firm Elliptic suggested that hackers linked to North Korea might be behind the incident.
Currently, the hacker has converted all stolen assets into ETH, accumulating over 59,000 ETH—worth more than $200 million. To trace and recover the funds, WazirX has reported the incident to India’s Financial Intelligence Unit (FIU) and the Computer Emergency Response Team (CERT-In), and has contacted over 500 exchanges to block identified addresses.
Additionally, WazirX has launched a 10% white-hat bounty program to recover the stolen funds, inviting ethical hackers, blockchain forensics experts, and cybersecurity professionals worldwide to assist in tracking the stolen assets, recovering user funds, and conducting deeper analysis of the cyberattack.
Furthermore, due to the impact of the theft on WazirX’s ability to maintain a 1:1 reserve ratio, the exchange has temporarily suspended trading to conduct a thorough data review and security audit, while working to restore withdrawals as soon as possible.
As one of India’s leading crypto exchanges, WazirX has also seen a sharp decline in trading volume. According to previously disclosed figures, WazirX’s trading volume dropped to around $1 billion in 2023—a decline of over 90% compared to the previous year and 97% lower than in 2022. This downturn is closely tied to increasing regulatory pressure and India’s stringent crypto taxation regime.
Ownership Dispute with Binance Leads to Over 90% Drop in Annual Trading Volume
WazirX first gained public attention as Binance’s partner in entering the Indian market and was initially believed to have been acquired by Binance. However, after Indian regulators accused WazirX of money laundering, Binance distanced itself, sparking an ownership dispute. The fallout from this conflict laid the groundwork for the recent security breach.
In 2022, WazirX claimed it would relocate its base from India to Dubai due to new tax regulations on crypto trading. Shortly afterward, Indian enforcement agencies accused the platform of involvement in two money laundering cases and violations of foreign exchange rules, alleging it facilitated the laundering of 27.9 billion INR (over $350 million), and froze tens of millions of dollars in assets belonging to several executives.
Binance announced in 2019 that it had "acquired" the exchange. But after Indian authorities leveled money laundering allegations against WazirX, Binance CEO CZ quickly clarified that the acquisition had never been completed. He stated that Zanmai Labs—an entity operated by WazirX’s original founders—was responsible for running WazirX, and Binance never held any shares in Zanmai Labs. Binance only provided technical solutions such as wallet services and off-chain transaction integration to reduce network fees. WazirX managed all other aspects, including user registration, KYC, trading, and withdrawal initiation.
CZ’s clarification was immediately challenged by WazirX CEO Nischal Shetty, who asserted that WazirX had indeed been acquired by Binance. He explained that Zanmai Labs was an Indian entity owned by himself and co-founders, licensed by Binance to operate INR-crypto trading pairs on WazirX. Binance handled crypto-to-crypto trading and crypto withdrawals. Users could verify this via WazirX’s Terms of Service (TOS). Moreover, Shetty claimed Binance controlled the WazirX domain, had root access to AWS servers, held all crypto assets, and received all crypto profits—emphasizing that Zanmai and WazirX should not be confused.
This led to months of public disputes, with both sides holding firm. Binance accused WazirX of deflecting blame for misconduct. CZ urged users to move their funds from WazirX to Binance, claiming that in February 2022, Binance requested access to WazirX’s system source code, deployment, and operations—but was rejected. Binance stated it had no control over WazirX’s systems and subsequently discontinued support for off-chain transfers between Binance and WazirX. Meanwhile, Zanmai Labs reportedly sought legal action to resolve the ownership dispute.
The ownership conflict escalated further in 2023. In January, Binance issued an ultimatum demanding WazirX issue a clarification statement about their misleading relationship, retract Shetty’s prior claims that Binance owned WazirX, and remove all Binance-related content from its TOS—otherwise, Binance threatened to terminate WazirX’s service agreement by February 3. WazirX rejected the demand, calling it “unethical,” accusing Binance of attempting to use media pressure and threats to force Zanmai into issuing false and misleading statements as “clarifications.” WazirX also argued that Binance’s allegations were baseless and unproven, pointing out that Binance had profited handsomely from controlling the exchange. In May 2023, WazirX reiterated on Twitter that Binance controls the WRX token (a Binance Launchpad project) and holds all IEO proceeds, having failed to conduct quarterly buybacks over the past five quarters (since January 2022).
Ultimately, Binance retaliated by cutting off wallet and related technical services to WazirX, leaving users unable to use Binance’s wallet infrastructure. The partnership was effectively terminated.
India’s High Adoption Rate Attracts Crypto Firms; Regulatory Landscape Shifts
Despite ending its collaboration with WazirX, Binance has not slowed its expansion in India. It now accounts for nearly 90% of the country’s $4 billion in crypto holdings—a testament to the market’s profitability and a key reason why major crypto firms continue investing there.
According to Chainalysis’ 2023 Global Cryptocurrency Adoption Index, India ranks first in global crypto adoption, underscoring its significant role in the crypto economy. Even India’s stock exchange has taken notice—announced plans in 2025 to introduce T+0 settlement to compete with crypto offerings.
Moreover, India’s traditionally hostile regulatory stance toward crypto appears to be softening. In January, apps like Binance and Kraken were removed from India’s Apple App Store after being ordered by the Financial Intelligence Unit (FIU) for non-compliance with anti-money laundering rules. However, by May, Binance and KuCoin became the first offshore crypto entities approved by FIU—on condition they pay fines following hearings.
There are also signs of potential reform in India’s heavy-handed crypto taxation. The 30% capital gains tax has long stifled crypto trading activity. For instance, Indonesia saw a 63% drop in crypto tax revenue—from $85 million to $31.7 million—after introducing partial crypto taxation. However, Indonesia is now reevaluating its income and VAT policies on crypto trades, recognizing that cryptocurrencies may soon become integral to its broader economy.
That said, regulatory uncertainty remains a challenge in India. The Finance Minister recently emphasized the need for global consensus on crypto regulation, while the Reserve Bank of India submitted its views highlighting macroeconomic risks associated with crypto, including tax evasion and threats to fiscal stability.
Overall, high adoption rates and signs of regulatory easing could drive further growth in India’s crypto market. Meanwhile, WazirX’s security breach may open up additional market opportunities for other exchanges.
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