WazirX — multi-signature wallet compromise

What happened

On 18 July 2024 WazirX, India’s largest cryptocurrency exchange by trading volume, disclosed that attackers had drained approximately $235 million from its primary multi-signature wallet — a Safe (formerly Gnosis Safe) multi-sig contract held on Ethereum and managed through Liminal Custody, an institutional custody platform. The stolen assets included large quantities of SHIB, MATIC, PEPE, USDT, and dozens of other ERC-20 tokens. WazirX immediately suspended all deposits, withdrawals, and trading.

The scale of the theft — approximately 45% of WazirX’s total customer assets under management — made full exchange-level recovery impossible without a restructuring. WazirX applied to the Singapore High Court under the Insolvency, Restructuring and Dissolution Act in August 2024, proposing a scheme under which all customers would absorb a proportional haircut of roughly 45%. After a period of creditor consultation, the scheme was approved by the required majority of creditors in early 2025.

The on-chain laundering signature — multi-hop dispersal through Ethereum mixing services, followed by conversion to ETH and further dispersal — was assessed by Elliptic and independent blockchain analyst ZachXBT as consistent with Lazarus Group tradecraft, though no formal US government attribution was issued as of the time of writing.

How it worked

WazirX’s primary wallet was a Safe multi-signature contract requiring four of six co-signers to authorise any transaction. Three of those keys were held by WazirX personnel using Ledger hardware wallets; one was held by Liminal Custody, which also provided the user interface through which transactions were constructed and reviewed. This distribution was intended to ensure that no single point of compromise — neither at WazirX nor at Liminal — could unilaterally move funds.

The attack defeated this architecture through a user-interface manipulation technique. The attacker first established malware or control over the WazirX-side signing environment. When a legitimate transaction was initiated through Liminal’s interface, the transaction data presented to the WazirX co-signers on their hardware wallet screens showed a normal, expected transfer — but the actual transaction data being transmitted to the blockchain was different. It contained calldata for a contract upgrade — specifically, an instruction to replace the Safe wallet’s implementation contract (the underlying logic governing the multisig) with an attacker-controlled contract. The WazirX signers approved what they believed was a routine transaction; they were in fact approving a transfer of ownership of the entire wallet to the attacker.

This technique — sometimes called a “blind signing” attack or a “UI spoofing” attack — exploits the gap between what a hardware wallet display shows a user and what the underlying transaction actually does. Safe multi-sig contracts support an upgrade mechanism (via proxy pattern) specifically to allow security improvements, but that same mechanism, when abused, allows a contract owner to replace the wallet logic entirely. After the upgrade executed, the attacker’s contract had owner-level access, and the drain of $235 million followed immediately.

Liminal and WazirX each published forensic reports that disputed the other’s account of where the failure originated. Liminal maintained that its infrastructure had not been compromised and that the malicious transaction was introduced at the WazirX side. WazirX maintained that the transaction data had been manipulated within Liminal’s interface layer. The dispute illustrated the difficulty of establishing accountability when an attack exploits the boundary between two independent custody infrastructure providers.

Timeline

• 18 July 2024 — Attacker executes the contract upgrade, takes ownership of the WazirX Safe wallet, and drains $235M in ERC-20 tokens across multiple transactions. WazirX halts all trading and withdrawals.
• 19–20 July 2024 — WazirX and Liminal each publish initial statements; on-chain analysts begin tracing. Elliptic and ZachXBT identify Lazarus Group-consistent laundering patterns.
• August 2024 — WazirX files for restructuring under Singapore’s IRDA. A 45% customer haircut proposed.
• Late 2024 — Creditor vote on the restructuring scheme. Majority approval obtained.
• Early 2025 — Singapore High Court approves the restructuring. WazirX resumes limited operations under restructured terms.

What defenders should learn

The WazirX attack is the definitive case study in multi-signature wallet architecture that is sound on paper but vulnerable in practice. Four-of-six signing should be resistant to a single-point compromise. In this incident, the protection was defeated not by simultaneously compromising four independent signers, but by deceiving them into approving a transaction whose effect they did not understand. The multi-sig threshold provides no protection if the signers cannot accurately verify what they are signing.

Hardware wallets are the right tool for custody co-signing, but they have a well-known limitation: when a transaction involves complex smart-contract calldata — as a Safe multi-sig operation does — the hardware wallet display typically shows a raw hex string or a high-level summary, not a human-readable description of the operation’s effects. A signer reviewing a Ledger prompt for a routine withdrawal and a signer reviewing a prompt for a contract upgrade may see similarly unintelligible output. Closing this gap requires either hardware wallets that can decode and display Safe transaction semantics in plain language (functionality that has been improving but was not mature at the time of the WazirX theft), or a policy requiring that any transaction touching a contract upgrade path be reviewed and rejected at the interface level before it reaches signers.

The custody provider boundary is a structural risk that the industry still handles poorly. When a theft occurs at the interface between an exchange and a third-party custody platform, the forensic question of where the malicious manipulation was introduced becomes immediately contested. The WazirX-Liminal dispute — each party pointing to the other’s infrastructure — left customers without a clear account of what happened and left the industry without a usable post-mortem. Exchanges that rely on third-party custody should have pre-agreed forensic-access and incident-reporting protocols that do not depend on cooperation from a party who may have liability exposure.

The restructuring outcome — 55 cents on the dollar approved by creditors — is a significant data point for the emerging jurisprudence of crypto exchange insolvency. Singapore’s IRDA was applied to a crypto exchange for the first time in this case, providing a legal framework where none had previously existed. For exchange operators and their insurers, the WazirX case establishes that exchange-level restructuring is a viable path when a theft is too large for the exchange’s own reserves to cover, but it also establishes the significant economic harm to customers from a 45% haircut — an outcome that should motivate much stronger reserve and insurance requirements for exchanges holding customer assets.