WazirX to Reopen INR Withdrawals in Phases Starting Aug. 26 after Security Breach

Crypto exchange WazirX announced on Friday that it will lift the complete suspension on INR withdrawals starting August 26. Users will be able to withdraw 66% of their INR balances reflected on the platform, with the suspension being removed in two phases. From August 26 to September 8, users can withdraw up to half of the 66% limit, and from September 9 to 22, they can withdraw the full 66%.

To facilitate withdrawals, WazirX will reduce withdrawal fees by 60%, lowering them from Rs 25 to Rs 10. In order to resume cryptocurrency withdrawals, WazirX plans to follow a Singapore scheme of arrangement, aiming for an equitable and user-approved distribution of cryptocurrency assets.

The exchange recently faced a breach involving its multisig wallet, which typically requires multiple private keys to authenticate and confirm transactions. The breach resulted in losses of up to $230 million.

WazirX stated that the scheme is necessary to ensure fair treatment for users and to create a legally binding outcome for all parties involved. Due to the cyberattack and the significant loss of ERC-20 tokens, the exchange lacks sufficient token assets to cover the liabilities owed to users.

“The nature of the cyberattack means that there will likely always be a mix of users who support and oppose various outcomes. The key to being able to resume cryptocurrency withdrawals in an equitable way is to do so as part of a legally binding solution agreed to and approved by users in line with legally defined voting thresholds,” WazirX said.

“While this legal process will be driven by us and our advisors, ultimately users will be able to vote on and approve a restructuring proposal before the Scheme is effective – this means that users will be kept updated on all material developments and your opinions understood via polls and town halls to ensure that the proposed restructuring captures what users want,” the exchange added.

Dispute with Liminal Custody

On August 14, WazirX announced the termination of its partnership with custody provider Liminal Custody, following the security breach that occurred on July 18. The breach involved the draining of funds from a Gnosis SAFE multisig wallet initially deployed by WazirX before their collaboration with Liminal and later integrated into Liminal’s platform. This incident has led to a public dispute between the two companies, each blaming the other for the exploit.

Liminal responded on July 19 with a detailed report defending its infrastructure. The report stated that the compromised wallet was imported into their platform by WazirX for operational convenience and that Liminal’s systems remained secure.

In a official statement shared with Unlock Blockchain, Akansha Sharma, PR and Communications Manager at Liminal, expressed concerns about WazirX’s security practices: “We cannot comment on the statement put out by WazirX, due to the lack of any information on the scope and methodology of the audit they have conducted. Having said that, if one were to go by the information they’ve shared, this actually raises serious questions on the security of their network infrastructure, operational custody controls and overall security posture, given that they were the custodians for 5 of the 6 keys”.

Liminal also highlighted that their preliminary audit indicated no breach in their front-end or UI. The company has engaged multiple independent auditors to conduct a forensic analysis, with detailed reports expected soon. “We are confident that the Liminal front-end and UI were not compromised and the report and findings will be shared as soon as they are made available to us,” the statement continued.