CoinDCX Under Siege: A Deep Dive into the $44 Million Breach, One Year After WazirX
Vishal Kumar Sharma • July 19th, 2025 • 5 min read • 👁️ 107 views • 💬 0 comments
CoinDCX Under Siege: $44 Million Hack One Year After WazirX – A Complete Timeline & Analysis
History doesn’t repeat itself, but it often rhymes.,
A saying that Indian crypto investors are painfully re-learning exactly one year after the WazirX hack.
1. Timeline: From Silence to Headlines in 17 Hours
| Date & Time (IST) | Milestone |
|---|---|
| 18 Jul 2025, ~07:30 PM | Irregular outflows detected from a CoinDCX operational wallet used for liquidity on a partner exchange. |
| 18 Jul 2025, 11:45 PM | On-chain sleuth ZachXBT first flags the suspicious movement on Telegram and X, tracing the attacker’s path via Tornado Cash. |
| 19 Jul 2025, 12:50 PM | CEO Sumit Gupta publishes a public thread confirming the breach and reassuring users that customer funds are untouched. |
| 19 Jul 2025, 01:30 PM | Web3 trading section re-enabled after a brief precautionary suspension. |
2. How the Hack Unfolded – A Technical Walkthrough
2.1 Entry Vector: “Sophisticated Server Breach”
- Target: An internal hot wallet whose sole purpose was to provide liquidity on a partner exchange, not to hold user assets.
- Method: The attacker leveraged a server-side vulnerability to gain privileged access and craft malicious withdrawal requests.
The attacker’s wallet received just 1 ETH from Tornado Cash as seed capital, then siphoned $44.2 million in multiple tokens, mostly USDC, SOL, and ETH.
2.2 Money Laundering Route
- Solana → Ethereum Bridge using Wormhole.
- Mixing via Tornado Cash to obfuscate origin.
- Dusting smaller amounts to fresh wallets, preventing quick blacklisting.
3. Impact Assessment – Who Lost What?
| Stakeholder | Impact |
|---|---|
| CoinDCX Treasury | -$44 million fully absorbed; no impact on balance sheet solvency. |
| Retail Users | Zero – funds remain in segregated cold wallets. |
| Partner Exchange | Trading pairs temporarily delisted; liquidity restored within hours. |
| Market Confidence | Short-term FUD; BTC/INR premium on CoinDCX actually narrowed by 0.3 % within 24 h, showing resilience. |
4. Response Playbook – How CoinDCX Contained the Fallout
4.1 Immediate Actions (first 60 minutes)
- Isolation of the compromised wallet.
- Signing halt on the partner exchange to prevent further outflows.
- Incident war-room with internal security + external cyber-forensics firm (name under NDA).
4.2 Communication Strategy
We have always believed in being transparent with our community, hence I am sharing this with you directly. — Sumit Gupta
- Real-time Twitter/X thread with technical details.
- AMA on CoinDCX Discord within 3 hours.
- Email/SMS blast to 1.6 crore users clarifying fund safety.
4.3 Long-Term Hardening
- Bug-bounty program (up to $100 k per critical bug) – announced 19 Jul.
- Multi-sig + MPC (multi-party computation) upgrade for all operational wallets.
- Quarterly on-chain attestations by external auditors starting Q3 2025.
5. Echoes of WazirX – A Side-by-Side Look
| Metric | WazirX (18 Jul 2024) | CoinDCX (18 Jul 2025) |
|---|---|---|
| Loss | $235 million | $44 million |
| User Funds Hit? | YES – 45 % haircut proposed | NO – fully protected |
| Root Cause | Compromised multisig owners | Server breach of hot wallet |
| Communication Lag | 15 hours | 17 hours (after on-chain exposure) |
| Recovery Plan | Restructuring in Singapore | Treasury absorption + bug bounty |
The anniversary coincidence has spooked Indian regulators, with RBI reportedly circulating a fresh discussion paper on exchange custody models.
6. Voices from the Community
Kudos for not passing the loss to users. But 17 h delay after ZachXBT’s alert is still too long. — @CryptoKaku (X)
Web3 trading halt was scary. Glad it’s back. Lesson: Keep a non-custodial backup. — @DeFi_Desi (Telegram)
7. How to Protect Yourself – 5 Actionable Tips
- Enable 2FA (hardware keys > TOTP apps).
- Whitelist withdrawal addresses and set 24 h cooling periods.
- Diversify: Don’t keep >20 % of your stack on any single CEX.
- Monitor on-chain alerts – Follow ZachXBT, Cyvers, and exchange status pages.
- Cold-storage: For long-term HODLing, move funds to Ledger/Trezor.
8. What’s Next? A 90-Day Roadmap
| Week | Milestone |
|---|---|
| 0–2 | Complete forensic report + file police complaint (already initiated). |
| 3–6 | Launch public bug bounty on Immunefi; publish audit results. |
| 7–12 | Roll out MPC-based withdrawal system; begin quarterly Merkle-tree proof-of-reserves. |
9. Frequently Asked Questions (FAQ)
Q1: Can I withdraw INR/crypto right now?
A: Yes. INR withdrawals are normal. Crypto withdrawals are also operational for users who have opted in.
Q2: Will CoinDCX raise trading fees to cover losses?
A: No. Management has explicitly ruled out fee hikes; the loss is absorbed from treasury reserves.
Q3: Was KYC data leaked?
A: There is no evidence of KYC or personal data compromise. The breach was limited to an operational wallet.
10. Bottom Line – Should You Still Trust CoinDCX?
- Pros: Rapid containment, transparent disclosure (after external alert), full user-fund protection.
- Cons: 17-hour communication lag, hot-wallet single-point failure.
Verdict: CoinDCX passed the stress-test by shielding users, but the incident underscores the need for real-time on-chain monitoring and faster crisis comms.
Disclaimer: This blog is for educational purposes only and does not constitute financial advice. Always DYOR.
