WazirX Hack: What Happened and How It Changed Crypto Exchanges

When the WazirX hack, a major security breach at one of India’s largest cryptocurrency exchanges in 2020. Also known as the WazirX withdrawal freeze, it wasn’t just a technical glitch—it was a collapse of trust that sent shockwaves through emerging crypto markets. Over $230 million in user funds vanished in minutes. No one saw it coming. No one could stop it. And for months after, users were left wondering if their money would ever return.

The WazirX exchange, a peer-to-peer crypto platform popular in India for buying Bitcoin and USDT with local bank transfers. Also known as WazirX P2P, it was once praised for its simple interface and fast on-ramps for new users. But behind the scenes, it ran on centralized hot wallets with minimal safeguards. When attackers exploited a vulnerability in the withdrawal system, they drained funds faster than the team could react. The exchange didn’t shut down—it froze withdrawals and went silent for weeks. Meanwhile, users watched their balances disappear from their apps while the company posted vague updates about "investigations" and "recovery efforts."

This wasn’t just a problem for WazirX users. It became a wake-up call for the entire crypto world. The crypto exchange security, the system of controls, audits, and wallet management practices that protect user funds on centralized platforms. Also known as exchange custody practices, it had been taken for granted by most traders who assumed their coins were safe if the platform looked professional. After WazirX, people started asking: If this could happen to one of the biggest exchanges in a major market, what about the smaller ones? What about your own wallet? The hack forced exchanges to rethink how they store funds, leading to faster adoption of cold storage, multi-sig wallets, and proof-of-reserves audits. But even today, many platforms still rely on outdated models—because they’re cheaper and easier to run.

What’s often forgotten is who got hurt the most: regular people. Not big investors. Not whales. Just everyday users in India who used WazirX to buy their first Bitcoin, save money in USDT, or send remittances. Many lost life savings. Some sold property to invest. Others took out loans. And when the exchange didn’t return their funds, they had no legal recourse. No FDIC. No bank insurance. Just a website with a contact form that never replied.

Years later, WazirX still operates—but it’s not the same. The platform was acquired by Binance, which injected capital and promised better security. But trust doesn’t come back with a press release. Users who lost money never got it back. And new users? They’re told to "do your own research"—but no one tells them what to look for. The exchange hack, a deliberate breach of a centralized crypto platform’s systems to steal user assets. Also known as crypto exchange theft, remains one of the most common reasons people lose money in crypto. It’s not just about hackers. It’s about design. About greed. About the illusion of safety.

Below, you’ll find real case studies, breakdowns of similar exchange failures, and guides on how to protect yourself—not just from hackers, but from the systems that let them happen in the first place.