Over the past few years, cryptocurrency has become part of the mainstream narrative. However, these digital assets have also provided avenues for online criminal activities like tax evasion and several other kinds of frauds.
After the Supreme Court of India revoked the blanket ban in 2020, the crypto industry started gaining more popularity in India, compared to the earlier years. With the increasing number of people joining the crypto industry, the chances of illegal activities also intensifying.
According to the reports, in the past six months, the top three crypto exchanges of India, including WazirX, CoinSwitch Kuber and CoinDCX, have banned more than two lakhs of registered profiles on their platforms. The increasing malicious activities through the accounts were the reason behind this account ban.
During an interview with an Indian news outlet, Sharan Nair, the CBO at CoinSwitch Kuber, told that the platform has blocked a total of 180,000 accounts in the past six months.
He further mentioned that the exchange is, presently, monitoring the daily activities of around 200,000 accounts on its platforms, which it believes are possibly involved in malicious activities.
WazirX is another crypto exchange that has suspended the accounts on its platform. The exchange received several requests from Indian as well as foreign law enforcement agencies to ban 14,469 registered accounts.
Nischal Shetty, the founder of WazirX, recently said, “WazirX is part of Blockchain and Crypto assets Council (BACC) along with other crypto exchanges. Our exchange is able to trace all users on the platform with official identity information. We already have a robust KYC and AML enabled a policy that we follow to self-regulate in the absence of regulatory guidelines. All the necessary information to track malicious activities that are “facilitated” by blockchains are publicly available.”
He further mentioned, “Additionally, WazirX has collaborated with TRM Labs, a cryptocurrency compliance platform, for transaction monitoring and investigation, wallet screening and risk management. It has helped bolster the security of the platform and scale compliance initiatives.”
Show-cause Notice To WazirX
A few months ago, the Enforcement Directorate of India issued a show-cause notice against WazirX, claiming the exchange violated the Foreign Exchange Management Act by transacting cryptocurrencies worth Rs. 2,790 crores.
As per the report, the ED initiated the probe on the basis of its ongoing money-laundering investigation into Chinese-owned illegal betting applications.
The CBO at CoinSwitch Kuber, in his statement, mentioned that the biggest problem regulators are those people who purchase bitcoin from one platform and then send it to another address. These addresses are mostly unknown, no one is able to trace these addresses, not even the crypto exchanges.
Nair further mentioned, “To curb this issue, CoinSwitch Kuber doesn’t let its users withdraw or move their funds in cryptocurrency. To withdraw their money, they have to first sell the crypto asset on the exchange and get their money deposited directly into their bank accounts in INR.”
Although the crypto exchanges are taking the initiative and suspending the suspicious accounts on their platforms, the policy experts believe that the real issue is the lack of regulations.
“The crypto world is largely unregulated. While the Reserve Bank of India has already expressed its reservation in allowing cryptocurrency, the government is yet to announce its stance on the issue,” said an industry expert.