India's Biggest Crypto Theft: How Rs 2000 crore stolen from a wallet

In what has been the largest cryptocurrency theft in India’s history, nearly Rs 2,000 crore (approximately $230 million) was stolen from a wallet associated with the WazirX exchange last month. This massive theft has left thousands of investors at a loss and has prompted serious investigations by several agencies.

WazirX is a major cryptocurrency exchange, reported the incident to various authorities, including the central cybercrime portal, the Financial Intelligence Unit (FIU), and the Indian Computer Emergency Response Team (CERT). A report by NDTV said that a police case has also been filed in Delhi. To understand how such a substantial theft could occur from wallets secured with multi-level authentication, forensic firms Pelorus Technology and Crystal Intelligence have been involved in the investigation.

Crystal Intelligence, a firm specializing in blockchain monitoring, used a security tool to trace the stolen cryptocurrency. Their investigation revealed that about 200 transactions occurred from the compromised wallet on July 18. They also discovered that the theft plan had been in preparation since July 10.

According to Sanjeev Shahi, Country Manager at Crystal Intelligence, the thief first compromised the wallet and then transferred the stolen funds, totaling $230 million, into their own wallet. The stolen cryptocurrencies were moved in various forms and were mixed using Tornado Cash, a service that hides the identity of cryptocurrency transactions, similar to how hawala operates in traditional banking. This mixing helped the thief maintain anonymity.

On the day of the theft, the stolen funds were converted into other cryptocurrencies and dispersed into multiple wallets across two different exchanges, involving around 2,000 transactions. Between July 18 and 22, a significant portion about 95% was consolidated into three wallets that are not currently linked to any exchange.

Despite the large amount of stolen funds, the thief cannot use them directly. To access the money, they would need to convert it into fiat currency (like dollars or rupees), which would reveal their identity. Shahi mentioned that the stolen funds are being closely monitored. The thief has reportedly parked 61,000 Ethereum (worth over ₹2 lakh each) in three wallets, but there has been no recent activity.

Pelorus Technologies, another firm involved in monitoring the situation, is keeping a close watch on these wallets. Director Kaushal Bheda stated that while the identity of the thief remains unknown, they are tracking any changes in the funds and will report any connections to terror financing.

Cryptocurrencies are not regulated by traditional banking systems, which makes tracing transactions challenging. The anonymous nature of crypto transactions adds to the complexity of identifying and apprehending those responsible for such large-scale thefts.

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