NEW DELHI: Indian crypto exchange WazirX received 1,023 requests from law enforcement agencies in the second half of the financial year ended 31 March, of which 952 were from Indian law enforcement agencies, and 71 were from foreign agencies. This was almost three times more than the 377 requests received during April to September 2021.
All the requests were related to criminal activities and the exchange complied with all of them with a turnaround time of 22 minutes, WazirX added.
Under the IT Act, companies are required to comply with information requests from law enforcement within 72 hours.
The data was shared by Wazir X as part of its second semi-annual transparency report.
The report showed that 95% of crypto-associated frauds occurred outside the Blockchain ecosystem, which means the crypto platform was not directly targeted. Ponzi schemes accounted for 40% of the frauds, phishing scams 25%, impersonation 25%, and identity theft 5%.
The surge in value of cryptos during the pandemic led to an investment spree in India too. Taking advantage of this fraudsters and cybercriminal also intensified rug pulls (crypto scams to fool investors), attempts to steal cryptos directly from wallets and launder money through cryptos.
Since cryptos are based on blockchain technology that is decentralized and designed to protect anonymity of nodes, tracking stolen cryptos across the chain becomes challenging for law enforcement agencies.
According to blockchain analysis firm Chainalysis, the total value of cryptocurrencies held on illicit addresses jumped to $14 billion in 2021 from $7.8 billion in 2020. Also, investors lost over $2.8 billion globally to various crypto scams in 2021.
Though number of crypto cases that are solved is still low, according to police officials, they have had some success in last few months. For instance, in January, enforcement directorate (ED) uncovered an initial coin offering scam involving a fake crypto called Morris coin, where 900 people in Kerala, Tamil Nadu and Karnataka were duped of over ₹1,200 crore.
Similarly, in April, the cybercrime unit of Uttar Pradesh Police busted a ₹3,000 crore scam in which money was transferred to different countries in the form of cryptos.
In addition to requests from law enforcement, WazirX also acted on requests from consumers and its legal team to lock 17,218 accounts. Of the total, 73% were based on consumer requests while the rest were locked at the behest of the legal team over disputes related to payments. The number of accounts locked during the six-month period rose 19% sequentially, WazirX added.
Crypto companies in India including virtual asset, exchange, and custodian wallet providers have been asked by the country’s nodal cybersecurity agency CERT-In to register and maintain information about their customers for a period of five years in a way that would allow “individual transaction to be reconstructed” along with information on “identification of the relevant parties.”
