WazirX Hacker Begins Laundering $11.6M Eth via Tornado Cash

In the aftermath of the WazirX hack case, the exploiter has recently moved 5,000 Ethereum (ETH) tokens. Moreover, they have initiated the laundering of the ETH stash via Tornado Cash, a privacy crypto mixer. This makes the recovery of these Ethereum funds almost impossible for the Indian crypto exchange as it continues to attract backlash from the community.

A Look At WazirX Exploiter’s Ethereum Movements

The hacker moved 5,000 ETH, valued at approximately $11.6 million, to a new address (0x5990…), according to Cyvers Alert. Moreover, this action represents a crucial step in the laundering process, with $1.4 million already deposited into Tornado Cash.

🚨UPDATE🚨 @WazirXIndia hacker just transferred 5K $ETH (~$11.6M) to a new address: https://t.co/JyJoJDdkcK and already deposited $1.4M to @TornadoCash

Want to keep your company off our alerts radar? Learn how to secure your assets: Book a Demo 🚀 https://t.co/uUbFkFTp4h… https://t.co/QS8iffPwOj pic.twitter.com/qCBcDqFerk

— 🚨 Cyvers Alerts 🚨 (@CyversAlerts) September 18, 2024

The latest move comes on the heels of the hacker’s earlier transfer of 5,000 ETH, worth $11.4 million at the time, to a different address. Subsequently, they transferred the entire Ethereum stash to Tornado Cash with only 0.45 ETH left on that address.

The ongoing laundering activities have severely complicated the recovery efforts for WazirX, making it nearly impossible to retrieve the stolen Ethereum. The situation presents a bleak outlook for the Indian crypto exchange, which has been struggling to address the fallout from the breach.

Overview of Restructuring Plan

In a recent presentation, Kroll, a leading risk management firm, outlined potential recovery scenarios for WazirX creditors. According to Kroll’s analysis, creditors could potentially recover up to 100% of their USD claims, if the future price movements of Bitcoin (BTC) and Ethereum (ETH) show a surge.

Currently, the exchange guarantees a 55% USD recovery for creditors at the point of rebalancing. In addition to recovery concerns, tax implications of token conversion are now a critical issue.

The Indian government imposes a 1% Tax Deducted at Source (TDS) on crypto sales exceeding INR 50,000 within a fiscal year, alongside a 30% capital gains tax on gains exceeding INR 1,00,000 in a fiscal year. The conversion of tokens by WazirX could potentially be classified as a ‘sale’ under the tax law, leading to significant tax liabilities.

As of yet, WazirX does not hold adequate reserves for several popular ERC-20 tokens, including Shiba Inu (SHIB), Pepe Coin (PEPE), and Polygon (POL). As a result, users holding these tokens face the prospect of conversion, which could carry additional tax implications.

During a recent town hall meeting, WazirX founder Nischal Shetty acknowledged that the tax implications of token conversions had not been thoroughly considered yet. He assured users that the exchange would assist as needed.

However, the town hall received criticism from users who had previously been promised a 57% token recovery rate but are now faced with a reduced recovery estimate of 52-55%.

Also Read: US Fed Interest Rate Cuts to Be Decided Today: What Do Experts Say?