WazirX Ends Custody Relationship With Liminal, Is Moving Funds to Multisig Wallets

In the fast-paced world of cryptocurrency, security is paramount. Recent events have put WazirX, one of India’s leading crypto exchanges, under the spotlight. Following a significant security breach, WazirX is taking decisive action to protect user funds. Let’s dive into the details of their recent moves and what it means for you.

WazirX Cuts Ties with Liminal: What Happened?

WazirX has officially ended its custody relationship with Liminal Custody after a $230 million exploit last month. This breach resulted in a substantial loss of customer funds, prompting a thorough review of their security protocols. The exchange is now migrating its remaining assets to new multisig wallets.

Key Highlights:

• End of Partnership: WazirX is no longer using Liminal’s services.
• Security Breach: A $230 million exploit triggered the decision.
• Fund Migration: Assets are being moved to new multisig wallets.

This decision underscores the critical importance of secure custody solutions in the crypto space. But what exactly led to this split?

The Blame Game: WazirX vs. Liminal

Following the July exploit, both WazirX and Liminal pointed fingers at each other, leaving users in a state of uncertainty. WazirX suggested vulnerabilities in Liminal’s interface post-incident, while Liminal maintained that their infrastructure remained secure. The lack of clarity only amplified concerns among WazirX users.

WazirX’s Stance: “While we believe our interface and systems remain uncompromised, the same cannot be said for the custodian’s interface post the July 18th incident, prompting this precaution.”

Liminal’s Response: “The client could have removed the funds immediately post the incident. They’ve always had the ability to exercise full control of wallets, regardless of Liminal or the Liminal key. We have supported and will continue to support the client in moving their wallets and assets as requested.”

Moving to Multisig Wallets: A Step Towards Enhanced Security

To bolster security, WazirX is migrating its assets to new multisig wallets. But what are multisig wallets, and why are they considered more secure?

Multisig Wallets Explained:

• Multiple Signatures: Multisig wallets require multiple private keys to authorize a transaction.
• Enhanced Security: Even if one key is compromised, the funds remain secure.
• Reduced Risk: Minimizes the risk of unauthorized access and internal fraud.

By adopting multisig wallets, WazirX aims to provide a more secure environment for its users. However, the migration process is not without its challenges.

Challenges and Precautions

Moving large amounts of digital assets is a complex and risky undertaking. WazirX is exercising extreme caution to avoid further security incidents during the migration. As they stated on X, “We are exercising extreme caution in how and when we move these assets, considering the complexity involved.”

To ensure transparency, WazirX has committed to publishing a list of all new wallets once the migration is complete. This move aims to restore user confidence and demonstrate their commitment to security.

User Concerns and Transparency

In the wake of the exploit, WazirX faced criticism from customers unable to withdraw funds. Co-founder Nischal Shetty has urged users to remain patient while the exchange works to resolve the issues. Transparency is key to regaining user trust during this challenging period.

What Does This Mean for WazirX Users?

Here’s what WazirX users can expect:

• Enhanced Security: The move to multisig wallets should provide a more secure platform.
• Temporary Inconvenience: Some users may experience temporary withdrawal delays during the migration.
• Increased Transparency: WazirX has promised to provide updates and publish wallet information.

In Conclusion

WazirX’s decision to end its relationship with Liminal and migrate to multisig wallets is a significant step towards enhancing security and rebuilding user trust. While challenges remain, these actions demonstrate a commitment to protecting user funds and ensuring the long-term viability of the exchange. As the crypto landscape evolves, security measures must adapt to stay ahead of emerging threats. WazirX’s proactive approach signals a positive direction for the future.