The Delhi Police Special Cell has arrested SK Masud Alam, a resident of East Midnapore in West Bengal, in connection with a sophisticated cyberattack on the cryptocurrency exchange WazirX. According to the police chargesheet, Alam used fraudulent means to open a WazirX account under the alias Souvik Mondal. He then sold the account via Telegram to another individual, M Hasan, who allegedly leveraged it to compromise the platform.
The crypto exchange was hacked on July 18, leading to a staggering loss of over $230 million in digital assets, representing nearly 45% of the exchange’s holdings.
Alam’s arrest marks a significant step forward in an investigation spearheaded by the Delhi Police’s Intelligence Fusion and Strategic Operations (IFSO) division, reports India Today.
The cyberattack targeted WazirX’s hot wallet, which is used for active transactions, and attempted access to its cold wallet, a more secure offline storage system. Despite these breaches, investigators have found no evidence of unauthorised access to WazirX’s systems, locally or remotely, adding more complexity to the case.
The spotlight has also turned to Liminal Custody, a digital asset custody solutions provider entrusted with securing WazirX’s wallets. The chargesheet highlights Liminal’s alleged non-cooperation during the probe, accusing the firm of failing to provide critical information despite repeated notices.
Liminal Custody’s role in the security breach is particularly scrutinised because one of the six signatories required to authorise transactions from WazirX’s compromised multi-sig wallet belonged to the firm.
However, in a public statement, Liminal denied any lapses, asserting its commitment to regulatory compliance and cooperation with authorities. The firm clarified that it has formally responded to inquiries and engaged directly with IFSO officials, emphasising its transparent operational practices.
As part of the probe, authorities seized three laptops from WazirX used by authorised signatories to approve transactions. These devices are being examined to investigate potential misuse of the multi-sig wallet protocol.
Meanwhile, WazirX is launching a decentralised crypto exchange and recovery tokens. On the other side, WazirX hack victims are suing the crypto exchange at National Consumer Redressal Commission (NCDRC).
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