In the past six months, between April-September 2021, the top three cryptocurrency exchanges – WazirX, CoinSwitch Kuber and CoinDCX – have blocked over two lakh accounts citing malicious activities per a report on the Hindu Businessline.
CoinSwitch Kuber which recently raised nearly $260 million, alone has suspended 180,000 accounts in the past six months, while it is currently monitoring the daily activities of around 200,000 accounts that can possibly be malicious, Sharan Nair, CBO, CoinSwitch Kuber, was quoted.
WazirX has blocked 14,469 accounts after receiving requests from Indian and foreign law enforcement agencies as per the transparency report released by the crypto firm. Foreign law enforcement agencies raised 38 requests. About 90 per cent of the accounts were blocked after complaints from other users and the company’s internal tracking mechanism.
During this period, WazirX received a show-cause notice by Enforcement Directorate for alleged violation of the foreign exchange laws on transactions involving crypto-currencies worth ₹2,790 crores. The central investigation agency then said it has initiated a probe on the basis of its ongoing money-laundering investigation into Chinese-owned illegal betting and loan applications.
In recent months, the crypto firms have received mainstream attention by raising hundreds of millions at a unicorn valuation and increased user adoption. The exchanges have also received queries from the income tax department to bring crypto traders within the tax net and concerning the usage of the platforms for possible drug trafficking.
Nischal Shetty, Founder, WazirX, told BusinessLine, “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 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 added, “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.”