Bharat Web3 Association Boosts Security Following WazirX $230M Breach

Key Insights

• BWA forms cybersecurity and consumer protection task forces post-WazirX hack to enhance digital finance security.
• WazirX adopts a 55/45 approach for user fund recovery, ensuring fair and efficient resolution after the $230M hack.
• BWA broadens focus to include cybersecurity, engaging major crypto players to update guidelines and tackle ongoing challenges.

India’s Bharat Web3 Association (BWA) has intensified its focus on cybersecurity in response to the recent $230 million hack on WazirX, one of the country’s largest cryptocurrency exchanges. The BWA, chaired by Dilip Chenoy, has taken swift action to address the security breach and enhance consumer protection within the crypto industry.

Formation of Cybersecurity and Consumer Protection Task Forces

In light of the WazirX hack, the BWA has established two internal groups dedicated to tackling cybersecurity and consumer protection. The cybersecurity group, composed of chief information security officers (CISOs) from member firms, is tasked with developing standard operating procedures (SOPs) and implementing solutions to prevent future breaches. This team aims to create a robust framework to safeguard digital assets and maintain trust within the crypto community.

The second group focuses on consumer protection, ensuring that guidelines are regularly updated and user interests are safeguarded. This group will review existing policies and propose enhancements to better protect consumers from potential threats and vulnerabilities in the digital finance space.

Chenoy emphasized that a comprehensive investigation into the WazirX breach is currently underway. The BWA is closely monitoring the situation and maintaining regular communication with WazirX and Liminal, the affected parties. The association has requested a thorough forensic analysis and root cause evaluation from both companies. 

Additionally, the BWA has suggested a third-party evaluation of the forensic report to ensure an objective and neutral review. This approach is intended to provide a detailed and impartial analysis of the incident, ensuring that all aspects of the breach are thoroughly examined.

Expansion of BWA’s Scope to Cybersecurity

Historically, the BWA has focused on regulatory compliance, including registering with the Financial Intelligence Unit (FIU) and implementing Anti-Money Laundering measures. However, the recent WazirX hack has prompted the association to broaden its scope to include cybersecurity. This expanded focus is aimed at addressing the current challenges faced by the crypto industry and enhancing the overall security framework.

The BWA, which includes major players such as Coinbase, Polygon, CoinSwitch, Liminal, Biconomy, Tax Nodes, Giottus, and Hike, will also involve WazirX’s local rival, CoinDCX, in its newly established groups. These teams will review and update consumer protection guidelines while tackling the ongoing cybersecurity challenges.

WazirX’s Strategy for User Fund Recovery

In response to the cyberattack, WazirX has announced a strategy for recovering user funds. The hack affected approximately 45% of user funds, leading the exchange to implement measures aimed at minimizing disruption and maintaining platform stability. Drawing lessons from past incidents, such as the Mt. Gox and Bitfinex hacks, WazirX is adopting best practices to ensure a fair and efficient resolution.

WazirX has opted for a 55/45 approach, allowing users immediate access to 55% of their assets while locking the remaining 45% in Tether-equivalent tokens. This method aims to distribute the impact evenly across all users, preventing any single group from bearing a disproportionate burden. By socializing the loss, WazirX expects to facilitate a faster and more flexible resolution compared to traditional methods.

Options for Managing Remaining Assets

WazirX is offering users two different options for managing their remaining assets. Each option has specific conditions, which will be communicated to users through the WazirX app or website. 

Moreover, registered users will receive detailed instructions via email, guiding them through the process of selecting their preferred option. The deadline for response is August 3 at 7:00 am India Standard Time.