Unocoin Probes On-Chain Transactions Signed Outside BitGo Custody

Indian crypto exchange Unocoin is investigating whether a backup mechanism in its multisignature wallets was exploited, after transactions were signed and broadcast directly on-chain without passing through BitGo's platform. The company says it has not determined whether any crypto assets were lost, or the amount of any potential loss.

The transactions at issue bypassed BitGo entirely. Unocoin said it has received the information and clarifications it needed from BitGo, and that BitGo froze Unocoin's corporate account on Nov. 6 at Unocoin's own direction. The freeze mechanism worked as expected, according to the exchange. The problem sat elsewhere: signatures and broadcasts happened on-chain, outside the custodian's rails.

What went wrong with the backup design?

At the center of the incident is a wallet backup feature. Unocoin built it to preserve access to funds if BitGo ever became unavailable — a standard business-continuity concern for exchanges that rely on a single qualified custodian. That redundancy is now the suspected attack surface.

Unocoin is investigating three questions in parallel:

• How the backup mechanism actually worked in practice
• Whether crypto assets were lost as a result
• Whether information privacy was affected

The company has not established the amount of any potential loss. It has also not said which assets the affected wallets held.

The timeline is short and specific. Unocoin first detected unauthorized activity on Nov. 6 and requested freezes for its BitGo and Fireblocks corporate accounts that same day. Then, on Nov. 9, it detected further unauthorized activity. That second wave pushed the exchange to suspend all services, and the suspension remains in effect while the investigation continues.

What does this change for Unocoin's users?

In practice, everything is on hold. All services are suspended, and the exchange has given no date for restoration. Unocoin says its investigation and its work to restore services are both continuing, but it has not published a roadmap, a reimbursement policy, or a preliminary loss estimate.

The custodian relationship, by contrast, appears intact. Unocoin's statement frames BitGo as cooperative rather than compromised: the exchange got the clarifications it needed, the account freeze executed on request, and the unauthorized transactions never touched BitGo's platform. If the backup mechanism was indeed exploited, the operational failure sits in Unocoin's own key-management architecture — the redundancy designed for resilience becoming the point of leverage.

Why multisig backups carry their own risk

The incident is a case study in how recovery mechanisms can undermine the security they were meant to support. A multisignature setup splits control across keys so no single compromise drains funds. But a backup path that can reconstruct signing authority outside the custodian effectively adds another door — and doors need guarding too.

For other exchanges running similar backup designs, the operational lesson is direct: audit the recovery path with the same rigor as the primary custody stack, because on-chain signing does not care which door the signature came from.

Unocoin has not said whether external forensic firms or Indian authorities are involved. The National Company Law Tribunal and the Financial Intelligence Unit, India's key crypto-sector regulators, have not commented publicly. Unocoin's next disclosures — a loss figure, a restoration timeline, or the technical root cause — will determine whether this stays a contained key-management incident or becomes a broader custody and solvency question for one of India's longest-running exchanges.