CERT-In Warns AI Hackers Stole Exchange Wallet Keys in Critical CRAFTY FALCON Alert

Critical Alert Names Crypto Exchanges

India's national cybersecurity agency has escalated its response to an artificial intelligence-driven hacking group that steals cryptocurrency wallet keys and drains funds from exchanges and financial firms. The Indian Computer Emergency Response Team (CERT-In) classified its advisory on the group, tracked as CRAFTY FALCON, as critical and published it on November 4, updating a campaign it first flagged in October. The notice explicitly adds crypto exchanges and virtual asset service providers to a target list that already covered nonbank lenders, digital lending platforms, fintech companies, payment aggregators and service providers. According to the advisory, the threat is active and ongoing, and the agency's financial sector unit CSIRT-Fin keeps receiving reports of successful attacks, including from firms that had already received earlier restricted advisories and completed remediation. The document describes an actor that “surveys its targets with machine intelligence” and strikes by triggering transfers through the victim's own payment and disbursement APIs. The attack chain starts with exploitation of vulnerable applications and exposed testing environments; shared credentials and access tokens then carry intruders into production systems, while cloud infrastructure is used to deploy malicious files. Once inside, the group reverse-engineers application code to build tailored exploits and steals the wallet keys that secure platform-held funds, then moves balances out of digital wallets. Those keys are the root credentials behind custodial setups, including the HD wallet structures that derive many addresses from a single seed phrase. The advisory names no affected exchange and puts no figure on losses. Outside corroboration exists: in October, cybersecurity firm CrowdStrike reported that an unidentified attacker used ARTEX, an AI penetration-testing tool also named in the advisory, alongside Claude Code and other models against financial firms in South Korea.

One-Rupee Test Payments and AI Tooling

Small validation payments, public AI tools and holiday timing form the core of CRAFTY FALCON's playbook. Before larger unauthorized transfers, the attackers send test payments, in some cases as little as one rupee, to confirm that a transfer path through the victim's payment APIs works. The agency found publicly available AI tooling inside the attacks, naming PentAGI and CyberStrikeAI, and said these tools run complete attack chains on their own and adjust payloads as targets respond. Timing is deliberate: raids were scheduled for weekends and holidays, when monitoring staff is thin, and the group returned to nonbank financial companies and fintechs that had already acted on earlier restricted warnings. The advisory does not mention Diwali, but the festival falls on Sunday, November 8, creating a combined holiday and weekend coverage gap. CERT-In wants firms to add personnel and lower alert thresholds during such windows. The recommended controls are specific: wallet keys should sit in hardware security modules or cold storage, cryptocurrency withdrawals should require multi-signature approval, and cooling-off periods for newly added beneficiaries should apply across payment systems. Those checks add human review before funds move, which can slow some legitimate withdrawals and payouts. Loss history shows what a successful drain means in practice. In July 2024, hackers took more than $230 million from the Indian exchange WazirX; the platform relaunched in October 2025 under a restructuring approved by a Singapore court, and eligible users received about 85% of their approved claims. By contrast, Binance said on October 29 that it covered roughly 95% of its $6.3 billion loss from its own reserves. Full compromise indicators were shared only with financial firms, in a restricted version of the warning, so the public advisory leaves the scope of successful breaches open. Disclosures from affected lenders or exchanges would settle that question.

The explicit naming of crypto exchanges turns what began as a fintech warning into a custody test for Indian platforms, including spot trading venues that hold customer keys around the clock. The control list in the advisory, hardware security modules, multi-signature withdrawals and cooling-off periods for new beneficiaries, points to slower but better-audited payout flows once firms comply. Who absorbs a drain depends on the balance sheet: the WazirX restructuring and Binance's reserve backstop set two very different recovery templates for the industry. The advisory is silent on laundering paths and does not indicate whether proceeds moved through a crypto mixer, so disclosures from affected firms will reveal the campaign's real cost.