WazirX Hit by $230 Million Hack as Funds Laundered Through Tornado Cash, Customers Face Losses

A hacker stole $230 million from WazirX, an Indian cryptocurrency exchange. They began transferring these funds through a service called Tornado Cash. This move helps them hide their tracks.

The hacker started moving nearly $4 million worth of ether (ETH) to obscure where the money came from. WazirX is now restructuring after this significant breach. Unfortunately, customers are only expected to recover about 55% to 57% of their funds.

Tornado Cash allows users to exchange tokens while masking their wallet addresses across different blockchains. It’s not a bad service on its own, but it’s often used by criminals to cover up stolen funds.

The attacker executed around 16 transactions on the Ethereum network, moving nearly $4 million in ether. Data from Arkham shows that the funds went to a Tornado Cash router. This address currently holds over $155 million in various tokens, mostly in ether, valued at $150 million. Interestingly, it had never moved funds to Tornado before.

In July, WazirX faced a security breach in one of its multisig wallets. This incident led to the loss of over $100 million in shiba inu (SHIB) and $52 million in ether, among other assets. The stolen funds made up more than 45% of the total reserves reported by the exchange in June 2024. Since then, WazirX has filed for restructuring to manage its liabilities.

Legal advisors for WazirX indicated that customers are unlikely to get back all their funds. The best-case scenario suggests a return of 55% to 57%.

Reports suggest that the North Korean hacking group Lazarus is behind this attack. This group has laundered over $1 billion in stolen funds through Tornado Cash before the OFAC sanctions in 2022.