WazirX gets close to three times more queries from law enforcement in last 6 months

Indian crypto exchange WazirX received 1,023 requests from law enforcement agencies during the period of October 2021 to March 2022, out of which 952 queries came from Indian agencies, while 71 were from overseas. 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 the exchange as part of its second semi-annual transparency report, which it releases voluntarily to be more transparent about all developments.

The report further shows 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%. 

Also read: 5 most common NFT scams and how to avoid them

The surge in value of cryptos during the pandemic led to an investment spree in India too. Taking advantage of this, fraudsters and cybercriminals 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 decentralised 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 increased 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. In January, the 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.

In April, UP Police’s cybercrime unit busted a ₹3,000 crore scam in which the 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. Out of which 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 was 19% more than the six months before that, 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.”