Sumit Gupta, CEO of CoinDCX, has voiced strong criticism against two major cryptocurrency exchanges, WazirX and Phemex, for their lack of transparency regarding recent security breaches. Gupta argued that these exchanges’ attempts to protect their public image have ultimately cost the crypto community a great deal of money.
Gupta took to X (formerly Twitter), pointing out that if both exchanges had disclosed their breaches in the same manner as Bybit, the vulnerability in the Gnosis Safe multisig wallets could have been detected earlier, potentially preventing the $1.4 billion hack of Bybit.
Bybit’s $1.4 Billion Hack
Bybit recently suffered a massive $1.4 billion breach, where hackers exploited vulnerabilities in Gnosis Safe multisig wallets using a method called delegatecall. This allowed the attackers to modify transactions and steal funds. Bybit’s transparency in publicly disclosing the breach enabled other exchanges and platforms to address their own security measures.
In response, Safe (formerly Gnosis Safe) recognized the vulnerability, launched an investigation, and is working on enhancing its security protocols. The company has also advised users to follow best practices to safeguard their assets.
WazirX and Phemex Hacks
WazirX experienced a major security issue in July 2024, with hackers exploiting vulnerabilities in its Gnosis Safe multisig wallet. This led to a $230 million loss, with hackers making unauthorized payment transfers.
Phemex, in a similar attack in April 2024, lost over $100 million. The attack followed a pattern like the one seen in Bybit’s breach, where hackers used malicious smart contracts to alter transactions and steal funds.
The Common Link: Gnosis Safe Multisig Wallets
Gupta pointed out that the three incidents all shared a critical commonality: the use of Gnosis Safe multisig wallets. Hackers exploited the delegatecall vulnerabilities in these wallets to manipulate contract storage and steal funds.
Gupta explained, “The attack deployed malicious smart contracts in advance to do a masked upgrade, containing hidden backdoors and the ability to manipulate contract storage and steal funds by executing unauthorized transfers by setting the ‘operation’ field to 1 (delegatecall) instead of 0 (call).”
CoinDCX’s Security Measures
Gupta emphasized that CoinDCX has implemented robust security measures to prevent similar attacks. The exchange does not use Gnosis Safe wallets, reducing the risk of exploits associated with them. Furthermore, CoinDCX avoids using smart contracts for fund transfers, minimizing risks like proxy attacks and delegatecall exploits. All transactions at CoinDCX require manual approval, adding an extra layer of security to prevent unauthorized movements of funds.
Gupta concluded with a cautionary message, saying, “Hackers are getting quite active these days! We and our security team are always on our toes when it comes to security. Stay safe!”
This criticism underscores the ongoing security challenges facing cryptocurrency exchanges and the importance of transparency in dealing with breaches.
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