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Wallet address associated with the notorious WazirX crypto hacker has moved $6.5 million worth of stolen Ether (ETH) through the sanctioned crypto mixer Tornado Cash. This move comes as WazirX, one of India’s leading cryptocurrency exchanges, has accelerated its timeline for allowing user withdrawals, a decision aimed at restoring confidence among its users following the massive $235 million hack in July.
On September 3, blockchain security firm Cyvers reported that the WazirX crypto hacker had transferred a total of 2,600 ETH, valued at approximately $6.5 million, to Tornado Cash, a service widely known for its use in obfuscating crypto transactions. This action is viewed as an attempt by the hacker to launder the stolen funds, making it more challenging for authorities and blockchain analysts to trace the money.
According to data from crypto tracking platform DeBank, the hacker’s wallet address initially held $6.7 million in stolen assets. However, in a span of just one hour, the WazirX crypto hacker made 26 separate transactions, each involving 100 ETH, to Tornado Cash, leaving only $154,000 in the wallet. This swift and calculated move underscores the ongoing challenges in securing stolen cryptocurrency and the persistent use of decentralized platforms like Tornado Cash by malicious actors.
Amid the backdrop of the WazirX crypto hacker’s activities, the exchange made a surprising announcement on September 3, allowing users to withdraw up to 66% of their Indian Rupee (INR) token balances nearly a week ahead of the scheduled timeline. This decision, likely driven by the need to reassure users and prevent further erosion of trust, marks a crucial step in WazirX’s recovery plan.
“Starting today, all eligible users can now withdraw up to the full 66% limit of their INR balances,” the exchange announced in a post on X (formerly Twitter). The withdrawal window, originally set to open on September 9, was brought forward to September 3, reflecting the exchange’s efforts to address user concerns promptly.
WazirX has been grappling with the aftermath of the July 18 exploit, which saw the WazirX crypto hacker drain $235 million from the exchange. In response, WazirX implemented a staggered recovery plan aimed at restoring normal operations. This plan includes the gradual reinstatement of Indian Rupee withdrawals, which officially began on August 26.
While WazirX has made strides in restoring access to funds, the situation remains complex. On August 23, the exchange revealed that 34% of INR-denominated balances were “frozen” and not immediately available for withdrawal. This decision was linked to ongoing investigations with various law enforcement agencies, highlighting the legal and regulatory challenges WazirX continues to face in the wake of the hack.
Additionally, WazirX is navigating legal proceedings in Singapore, where the company has chosen to pursue its legal restructuring efforts. This move is part of the broader strategy to stabilize the exchange and rebuild trust with its user base and the broader crypto community.
The actions of the WazirX crypto hacker and the exchange’s response have broader implications for the crypto industry, particularly in India. The use of Tornado Cash by the hacker brings to light the ongoing debate around the regulation of privacy-focused crypto tools. Tornado Cash, which has been sanctioned by the U.S. Department of the Treasury, remains a contentious issue, with some advocating for its legitimate use in preserving privacy, while others point to its frequent misuse by bad actors.
Moreover, WazirX’s proactive move to allow early withdrawals could set a precedent for how exchanges handle crisis situations. By accelerating the timeline for user withdrawals, WazirX has shown a commitment to user protection, even as it navigates the complex legal landscape post-hack.
Industry experts have weighed in on the situation, with some praising WazirX’s efforts to mitigate the fallout from the hack. “WazirX’s decision to allow early withdrawals is a positive step toward restoring user confidence,” said Arjun Gupta, a blockchain analyst at CryptoIndia. “However, the ongoing legal challenges and the actions of the WazirX crypto hacker underscore the need for stronger security measures and regulatory clarity in the crypto space.”
On the other hand, the use of Tornado Cash by the WazirX crypto hacker has sparked renewed calls for tighter regulations on privacy-focused crypto tools. “The misuse of platforms like Tornado Cash by hackers highlights a significant gap in the current regulatory framework,” noted Priya Sharma, a legal expert specializing in cryptocurrency law. “Regulators need to strike a balance between preserving privacy and preventing illicit activities.”
The ongoing saga of the WazirX crypto hacker serves as a stark reminder of the vulnerabilities within the crypto ecosystem. As WazirX continues its efforts to recover from the massive hack, the industry will be closely watching how the exchange navigates the complex legal, regulatory, and operational challenges ahead. The early withdrawal initiative is a step in the right direction, but the road to full recovery remains fraught with obstacles.
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