Indian crypto exchanges freeze suspicious accounts as bitcoin crosses $40,000


MUMBAI: India’s cryptocurrency exchanges have stepped up efforts to uncover suspicious activity and curb the pumping and dump systems as Bitcoin crossed the $ 40,000 mark yesterday. CoinDCX, a major cryptocurrency exchange, claimed to have frozen 4 accounts that were used to artificially raise the price of smaller cryptos in order to drive retail investors to inflated prices.

India lacks formal KYC rules or cryptocurrency exchange regulations and so the exchanges have developed their own rules. The lack of regulation also occurs when the U.S. Financial Crimes Enforcement Network (FINCEN) has proposed mandatory KYC norms for transferring cryptocurrency to non-custody wallets over $ 3,000.

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“There have been cases where certain transactions were marked in red when they were in conflict with AML policies on the exchange and we had to obtain details of the source of funds from customers,” said Monark Modi, founder and CEO of Bitex, one United Arab Emirates-based cryptocurrency exchange company operating in India.

“At Bitex, not only do we have strict KYC policies, we also have strict Anti-Money Laundering (AML) policies, which ensure that transactions made on the exchange are legitimate and compliant,” he added. CoinDCX co-founder Neeraj Khandelwal warned investors against investing in small cryptocurrencies without adequate knowledge. “While small-cap crypto coins, much like penny stocks, can look lucrative, it is imperative that new cryptocurrency investors do appropriate research before investing in projects, teams, investor support, specs, and fundamentals on low prices and illiquid markets,” he said. We have observed pumping and dumping maneuvers by operators on low volume and low volume crypto coins and estimate that this has affected multiple users around the world. We have proactively identified and frozen 4 accounts of such people, “he added.

The increased drive for compliance also comes as interest in crypto investments in India has risen. WazirX, India’s largest cryptocurrency exchange, now reports a user base of over 1 million versus 550,000 users mentioned in a blog post in June 2020. The exchange reported $ 2.34 billion in transactions in 2020. However, 70% of its users were below the age of 34 and 85% were men, according to data reported to Mint by the cryptocurrency exchange. The market capitalization of cryptocurrencies surged above the $ 1 trillion mark on a strong rally last month. Bitcoin passed its 2017 high of just under $ 20,000 on December 16, 2020 and is currently trading near $ 40,000.

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