Indian Crypto Exchanges Freeze Suspicious Accounts, as Bitcoin exceeds $40,000

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India lacks any formal cryptocurrency KYC guidelines or exchange rules and thus exchanges have developed their own rules.

Noticing operators’ pump and dump maneuvers in single stock, low trading volumes of crypto coins, a cryptocurrency exchange suspended four accounts subsequently.

India’s cryptocurrency exchanges have made improvements their attempts to detect suspicious activities and crack down on ‘pump and dump’ schemes, as yesterday, bitcoin crossed the $40,000 level. A major cryptocurrency exchange, CoinDCX, said it had frozen four accounts that were used to artificially push up the price of smaller cryptos in an attempt to attract retail investors to enter at inflated rates.

India lacks any formal cryptocurrency KYC rules or exchange regulations and exchanges have therefore developed their own rules. The lack of transparency comes as the US Financial Crimes Compliance Network (FINCEN) has introduced mandatory KYC requirements for cryptocurrency transactions to non-custodial wallets above $3,000.

“There have been occasions where certain transactions were red flagged when they were in accordance with AML exchange policies and we had to look for information from customers about the source of funds,” said Monark Modi, founder and CEO of Bitex, a cryptocurrency exchange based in the UAE with operations in India.

“In addition to ensuring strict KYC, we also have strict Anti Money Laundering (AML) policies at Bitex that ensure that transactions carried out on the exchange are legitimate and compliant with regulations,” he added. Neeraj Khandelwal, co-founder of CoinDCX, cautioned investors without adequate knowledge against investing in small cryptocurrencies.

“While small cap crypto coins may look attractive, similar to stock market, before investing in low price and overvalued markets, it is critical that new cryptocurrency investors do proper research on the projects, team, investor backing, techniques, and fundamentals,” he said.

We detected operators’ pump and dump strategies in small cap, low crypto coin trading rates, and we suspect that this has affected several users around the globe. We have identified and frozen 4 accounts of such individuals proactively,” he added.

Even as interest in crypto investing has grown in India, the increased drive towards regulation comes. WazirX, the largest cryptocurrency exchange in India, now reports a user base of more than 1 million, up from the 550,000 users listed in a June 2020 blog article. The exchange recorded $2.34 billion worth of transactions in 2020.

However, according to information released to Mint by the cryptocurrency exchange, 70 percent of its users were below the age of 34 and 85 percent were men. On the back of a sharp rise over the past month, the share price of cryptocurrencies has soared past the $1 trillion level. On 16 December 2020, Bitcoin reached its 2017 high of just under $20,000 and is currently trading around $40,000.