The Liminal MPC Wallet Provider Security Breach

In a recent security breach at India-based crypto exchange WazirX, Liminal, a multiparty computation (MPC) wallet provider, stated that its infrastructure was not compromised. The breach, which resulted in an estimated $235 million loss, was attributed to compromised devices within WazirX’s network. The post-mortem report released by Liminal on July 19 clarified that the breach was not caused by Liminal’s user interface (UI), as earlier suggested by the exchange.

According to Liminal, the breach occurred because three of WazirX’s devices were compromised. The attacker exploited Liminal’s multi-signature wallet system, which was configured to provide a fourth signature if three valid signatures were received from WazirX. The attacker managed to alter transaction details and extract signatures from failed transactions to initiate a new, seemingly legitimate transaction that resulted in the transfer of funds to their Ethereum account.

Liminal refuted WazirX’s claims that its servers caused incorrect information to be displayed, asserting that the compromised devices sent malicious payloads. The MPC provider emphasized that its system automatically provides the final signature once the required number of valid signatures is received from the client. However, the post-mortem report raised unanswered questions about how the attacker initially gained access to the three WazirX devices.

WazirX stated that it has reached out to law enforcement and is pursuing additional legal actions in response to the security breach. The exchange’s immediate plan of action includes tracing the stolen funds and conducting a deeper analysis of the breach in collaboration with forensic experts to recover customer funds.

The security breach at WazirX highlights the risks associated with compromised devices and the importance of robust security measures within cryptocurrency exchanges. Liminal’s response to the incident underscores the need for transparency and collaboration in addressing security breaches in the cryptocurrency industry. Moving forward, it will be essential for exchanges to implement stringent security protocols to protect user funds and prevent similar incidents from occurring in the future.