WazirX Scam – India’s One of the Biggest Crypto Controversies

In July 2024, India’s largest crypto exchange, WazirX, suffered a massive breach that shook the nation’s burgeoning digital asset ecosystem. Over $230 million vanished almost overnight, leaving tens of thousands of retail investors in limbo and prompting fierce debates over security, accountability, and the need for clearer crypto regulations. Here are insights into the WazirX Scam.

Table of Contents

Timeline of Key Events

July 18, 2024: WazirX’s multi-signature wallet was compromised in a sophisticated cyberattack, resulting in the theft of roughly $234.9 million (₹2,000 crore) and an immediate freeze on INR and crypto withdrawals.
July 29, 2024: Forensic analyses attributed the hack to North Korea–linked Lazarus Group, spotlighting serious vulnerabilities in WazirX’s wallet infrastructure.
December 18, 2024: Binance announced it would delist WazirX’s native token WRX, citing non-compliance with its standards. WRX’s price plunged by up to 59 percent following the announcement.
February 13, 2025: The Delhi High Court ordered a fresh police investigation into the $235 million hack, criticizing the initial status report as inadequate and directing authorities to submit an updated probe by mid-February.
April 16, 2025: India’s Supreme Court dismissed a petition by 54 hack victims seeking an inquiry into WazirX, its co-founder Nischal Shetty, Binance, and custody provider Liminal Custody—citing the absence of clear crypto regulations in India.

How the Hack Happened

The attackers created a fake WazirX account, deposited tokens, and manipulated transactions to gain access to the exchange’s hot and cold wallets. Once inside, they altered the smart contract controlling the multisig wallet, allowing them to drain funds without needing WazirX’s authorization. The stolen funds accounted for nearly 45% of WazirX’s total customer holdings, forcing the exchange to suspend all withdrawals, leaving users stranded.

Legal Battles and Regulatory Vacuum

While victims pursued justice through India’s courts, each avenue underscored the country’s regulatory gaps. The Delhi High Court’s rebuke of the initial police findings highlighted procedural lapses, yet stopping short of naming individual culpability. When the matter reached the Supreme Court, the bench noted it could not intervene in a “regulation-free” domain, effectively closing the door on judicial relief for aggrieved investors.

Impact on Investors and the Crypto Ecosystem

The WazirX hack eroded confidence in India’s largest domestic exchange and sent shockwaves through global crypto markets:

Retail investors found their funds immobilized for months, with scant clarity on recovery prospects.
Competing exchanges faced intensified scrutiny over their security protocols and internal audits.
Policy makers felt pressure to accelerate comprehensive crypto-asset regulations to protect consumers and foster innovation.

Lessons and the Road Ahead

WazirX’s downfall underscores several imperatives for India’s crypto journey:

Stronger Regulatory Frameworks: Clear guidelines on custody, fund-flow audits, and incident reporting can deter malpractice and provide victims a legal recourse.
Robust Security Practices: Mandatory multi-sig audits by independent cybersecurity firms could prevent single-point failures.
Transparent Communication: Timely, detailed incident disclosures can help contain panic and maintain investor trust.

Conclusion

The WazirX saga stands as a cautionary tale at the intersection of technology, law, and finance. As India charts its crypto-regulatory roadmap, the lessons from July 2024 will prove pivotal in balancing innovation with investor protection. Until then, the quest for accountability and recovery continues—reminding us that in the decentralized world, trust and transparency remain the ultimate currency.

Stay tuned for ongoing updates as India’s courts, regulators, and crypto community navigate one of the sector’s most consequential controversies.

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