As cryptocurrency Bitcoin zoomed past the $40,000 on Friday, a cryptocurrency exchange in India froze 4 accounts thanks to increased interest in crypto. Cryptocurrency exchanges have increased their efforts in detecting suspicious activities and to put an end to ‘pump and dump’ schemes.
CoinDCX, India’s very own cryptocurrency exchange has frozen 4 accounts so far in their attempt. These accounts were used to push the price of smaller cryptos in an attempt to lure retail investors to step in at inflated prices.
While speaking to a news agency CoinDCX’s co-founder Neeraj Khandelwal said, “We observed pump and dump maneuvers by operators in small-cap, low trading volumes crypto coins and we estimate this has affected multiple users across the globe. We have proactively identified and frozen 4 accounts of such persons.”
Khandelwal also warned new investors in investing in smaller cryptocurrencies without foundational knowledge. Speaking to Mint, Khandelwal said, “While small-cap crypto coins may look lucrative, similar to penny stocks, it is imperative that new cryptocurrency investors do adequate research about the projects, team, investor backing, technical, and fundamentals before investing in low price and illiquid markets.”
It should be noted that so far India lacks any KYC (Know Your Customer) rules or regulations for cryptocurrency. Hence cryptocurrency exchanges are forced to create their own rules for appropriate regulation. For instance, when transactions are red-flagged the cryptocurrency exchange has to seek details on the source of funds from their customers.
This heightened scrutiny towards strict compliance comes because of exponential interest in crypto investing in India. WazirX which is India’s largest crypto exchange reports a user base of 1 million. Considering the user base was 5,50,000 in 2020, cryptocurrency can be now considered the hot investment vehicle. In 2020, WazirX reported transactions in crypto worth $2.34 billion.
As reported by Shiksha News earlier, the market cap of cryptocurrencies surpassed the $1 trillion mark thanks to a sharp bullish rally over the entire past month. Bitcoin, the most famous cryptocurrency, traded at approximately $40,000 on Saturday.