Indian crypto exchanges are partnering with security providers to protect user data and prevent a similar lapse of trust in the ecosystem.
Indian cryptocurrency exchanges have rushed to strengthen their security infrastructure and, in some cases, put in place additional measures in the aftermath of the recent WazirX hack. The renewed focus on the security of digital assets comes after one of the biggest crypto exchanges in the country, WazirX, admitted suffering a major security breach on July 18.
While exchanges already had multiple checks in place to ensure the platform's integrity, the incident has flagged the need for constant review of existing security infrastructure for possible gaps that could lead to a loss in investor funds.
“We adhere to the highest security standards in the industry. However, incidents like these remind us that security is not a one-time project but an ever-evolving concept,” said Balaji Srihari, Business Head, CoinSwitch, another leading crypto exchange.
Others agreed.
There is a need for ongoing monitoring and strong compliance frameworks to protect investors and uphold the integrity of the crypto ecosystem, said Edul Patel, CEO, Mudrex, a crypto investment platform.
“Regular audits of interface and transaction data, strengthening whitelisting and approval policies, and using advanced security tools and protocols are essential. Additionally, training teams to recognize and respond to threats, continuous technology upgrades, and adherence to compliance and regulatory registrations are crucial,” Patel added.
The hack at WazirX resulted in the theft of over $230 million - nearly half of the platform's estimated reserves - from one of its wallets leading to a loss of user funds.
Some other exchanges have beefed up their infrastructure with additional layers of security in response to this.
Unocoin, another Indian crypto exchange, has implemented stricter Multi-Factor Authentication (MFA) protocols and administrative access to critical systems in response to the WazirX incident.
The company has also started doing penetration testing – a simulated cyber-attack against a computer system to check for exploitable vulnerabilities – regularly, as part of its security strategy, said Sathvik Vishwanath, CEO and Co-founder, Unocoin.
“Improvements have also been made to cold storage security measures, including multi-signature wallets and improved physical security,” the co-founder added.
Exchanges across the industry jumped to act to instil confidence and address a possible negative sentiment within the investors towards the industry that has been marred with regulatory uncertainty and a high tax burden in recent times.
Besides a high tax on the returns made on investments in cryptocurrencies, Indian investors in this class of digital assets have often felt cyclical uncertainty over the years regarding their stability.
The lack of confidence also stemmed from past events such as the 2022 crash of the now-bankrupt FTX cryptocurrency exchange whose founder, Sam Bankman-Fried, was handed a 25-year prison sentence in March this year for stealing $8 billion from its customers.
Indian crypto exchanges are also partnering with security providers to protect user data and prevent a similar lapse of trust in the ecosystem.
“User Personally Identifiable Information and asset security are of foremost importance to us. We are currently working with reputable third-party service providers who assess and monitor our infrastructure for all activity. We have a comprehensive architecture that is constantly being reviewed and upgraded based on current market conditions,” said Raj Karkara, COO, ZebPay.