KEY POINTS
- WazirX is at center of July's losses, accounting for $230 million of the industry's total monthly losses
- Some industry experts have accused WazirX of lacking transparency and effort toward fund recovery
- The exploit trend "calls for proper security provisions and education for users": Chimp Exchange's Akshay Nassa
July saw one of the biggest losses in the cryptocurrency industry following over a dozen exploits, including the staggering $230 million hack into Indian crypto exchange giant WazirX.
July losses top $266 million
The total losses incurred by the industry in July reached $266.05 million, according to a Thursday report by blockchain security firm PeckShield. There were 16 hacks across the crypto space throughout the month, including the $24 million lost by decentralized finance (DeFi) lending protocol Compound.
So far in the year, the month of May still saw the largest monthly security-related losses at over $574 million, followed by February, when the sector lost over $360 million to exploits and scams.
#PeckShieldAlert July 2024 witnessed 16 hacks in the crypto space, resulting in ~$266 million (w/o Compound Potential Governance Attack)) in losses.
— PeckShieldAlert (@PeckShieldAlert) August 1, 2024
Top 10 Hacks:#WazirX: $230 million (CeFi)#Compound: $24 million (Potential Governance Attack)#LI.FI: $9.73 million#Bittensor:… pic.twitter.com/jsmP9qLuqR
Still, July's losses were painful, particularly for WazirX, which has been called out by the industry for allegedly not responding to issue as expected.
WazirX lied about exploit diagnosis?
WazirX has been accused of not doing enough to manage the aftermath of the exploit, which, it initially said was due to a breach of one of its multisig wallets. The questions didn't end with the exchange's recovery efforts.
WazirX's Crisis Management Approach is Deeply Flawed
— Edul Patel 🍊 | duldul.eth (@Dul_dul) July 31, 2024
The hack that happened with @WazirXIndia two weeks ago is unfortunate and the whole industry can understand what the users and the WazirX team have been going through. But, the way WazirX has been responding to the crisis is…
@BoringSleuth, an emerging crypto investigator, said "WazirX was misleading, if not outright lying in their own diagnosis of the exploit, placing blame elsewhere." In a lengthy explanation that included graphs and presentations of how the WazirX exploit took place, @BoringSleuth revealed how, allegedly, "WazirX appears to have never became independent of Binance, and their shared multisig account was exploitable because 1 person controlled 4 of 6 signees."
We decided to look into where WazirX went wrong.
— TruthLabs 🫡 (@BoringSleuth) August 1, 2024
To begin our investigation, we looked at WazirX's own preliminary report on this Cyber Incident, and compared it with what we is shown in the actual Contract of their Exploited Multisig. We Immediately found massive red flags. pic.twitter.com/gcvrd9KQr9
Crypto behemoth Binance and WazirX have been embroiled in an ownership issue, going back and forth with their contradicting claims. Binance distanced itself from WazirX after the Indian government launched a probe into suspected money laundering-links. Notably, Binance said in November 2019 that it purchased the Indian exchange.
Profiting from vulnerabilities
"The month of July turned out to be one of the most profitable for crypto hackers this year," Akshay Nassa, the founder of Chimp Exchange, told International Business Times. He noted that "most of the hacked protocols are exploring avenues to recoup the lost funds, but only RhoMarkets saw its hacked $7.6 million returned by the hacker."
Dear Rho Fams,
— Rho Markets📜 | Rho.scroll (@RhoMarketsHQ) July 19, 2024
We are thrilled to announce that the issue has been successfully resolved, no fund get LOST, and we are currently in the process of reassigning funds back to the borrow pools.
Moving forward, we have outlined the following three meticulously planned steps in… pic.twitter.com/4ZhlpxhBmn
RhoMarkets confirmed about a day after it was hacked that the "issue has been successfully resolved" and no funds were lost. It has since completed repayments for affected pools and resumed protocol operations.
On track to lose more?
PeckShield previously reported that during the first half of 2024, the crypto industry lost a whopping $1.56 billion to hacks and other security-related breaches. Of the said amount, only $319 million was recovered.
#PeckShieldAlert 2024 H1 witnessed 200+ major hacks in the crypto space, resulting in ~$1.56b in losses, w/ $319m recovered.
— PeckShieldAlert (@PeckShieldAlert) July 3, 2024
This marks a significant 293% increase from the same period in 2023 (w/ losses amounted to $480m).#DeFi protocols remained primary targets, accounting… pic.twitter.com/A8d358xzLW
With July's massive losses and five months more before the new year, the burgeoning sector may be on track to shed more unless security measures are enhanced and crypto holders are properly educated. "Exploits in the market come in different forms and shapes – a trend that calls for proper security provisions and education for users," Nassa said.
