The recent hack on WazirX, in which $230 million worth of cryptocurrency was stolen, has reignited an ongoing dispute between WazirX’s co-founder, Nischal Shetty, and Binance, one of the largest global cryptocurrency exchanges.
Despite attempts to recover the crypto, the hacker and the funds still remain untraced.
WazirX Co-Founder Holds Binance Responsible
Nischal Shetty, co-founder of WazirX, has publicly claimed that Binance holds partial responsibility for the security breach. According to Shetty, Binance managed critical infrastructure for WazirX, including the exchange’s servers, website, crypto-to-crypto transfers, and cryptocurrency withdrawals.
Shetty insists that his company, Zanmai Labs, only handled the crypto-to-rupee operations, implying that Binance was responsible for the aspects of the exchange where the security lapse occurred.
In Shetty’s view, this division of operational responsibilities places Binance in a position of accountability for the hack that drained WazirX’s hot wallet, which held a large portion of customer funds.
Binance’s Response: “Don’t Shift Responsibility”
Binance, however, has strongly refuted Shetty’s claims, accusing WazirX of trying to shift the blame. Binance Labs, Binance’s venture arm, has released documents asserting that WazirX is responsible for safeguarding its users’ assets and that Binance had no direct involvement in the management or security protocols that failed during the attack.
According to Binance, WazirX is attempting to deflect the criticism onto them to avoid being held accountable for compensating its users after the hack. This public back-and-forth has escalated tensions, with both parties offering differing views on their responsibilities in running the exchange.
Binance also revealed a former Tweet by Nischal Shetty, who claimed to have been running WazirX in 2023.
Who Owns WazirX? A Dispute Rekindled
The ongoing finger-pointing has brought back another unresolved issue—the ownership of WazirX. Nischal Shetty claims that Binance acquired WazirX in 2019, thereby making Binance responsible for the exchange’s overarching management and operations. However, Binance has consistently denied these claims, stating that it only provides certain technological services to WazirX and does not own the company outright.
This disagreement over ownership has surfaced before but has become more pronounced after the July hack. With each side providing contrasting accounts of their relationship, the confusion around WazirX’s actual ownership has left users uncertain about who is ultimately responsible for the security breach and protecting their assets.
Update on the Hacked Funds
Amid these allegations and counterclaims, WazirX’s legal team has made some progress in recovering the stolen funds. It has been confirmed that approximately 57% of the total assets have been safeguarded.
Funds remain missing, and the exact timeline for reimbursing affected users is unclear. The exchange has yet to provide a detailed plan for compensating users for the remaining losses.
About the WazirX Hack
The hack, which occurred on 18 July 2024, resulted in the loss of $230 million worth of cryptocurrencies from one of WazirX’s multi-signature hot wallets. The stolen assets include:
- 5.43 trillion Shiba Inu (SHIB) tokens
- 15,298 Ether (ETH)
- 20.5 million MATIC tokens
- 640.27 billion Pepe (PEPE) tokens
- 5.79 million Tether (USDT)
- 135 million Gala (GALA) tokens
These funds were transferred to an external wallet, identified as “0x04b2,” and have since been moved through various addresses on the blockchain, making recovery efforts more challenging. The hacker immediately liquidated a portion of the stolen assets, particularly 640.27 billion PEPE tokens, valued at $7.6 million, destabilizing PEPE’s market price temporarily.
Not the First Incident
WazirX and Binance had earlier argued, with the former claiming Binance controlled its servers, crypto-crypto exchange pairs, and crypto withdrawals.
Binance’s then-CEO Changpeng Zhao replied to this with a series of Tweets.
