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It seems that every time a new technology emerges, so too do ne’er-do-wells seeking to exploit that technology for their own gain. Cryptocurrencies are no exception. Bitcoin’s meteoric rise last December led to a whole slew of hacks and scams being perpetrated around the world. Of late, India has been experiencing its own crypto crime wave that shows no signs of abating anytime soon.

2018 is going to be one for the record books. In the first half of this year alone, more than $2 billion has been lost to cryptocurrency exchange hacks and scams. India, in particular, seems to be experiencing a spate of crypto-related crimes.

As in most other parts of the world, the increase in popularity of cryptocurrencies in India brings with it no shortage of criminals eager to exploit investors. When cryptocurrencies were first taking off in the Asian subcontinent, scams were mostly limited to phishing links and key-stealing malware. Then came ransomware – malware that encrypts or otherwise locks important files on a user’s system until a ransom is paid – and mining malware.

As prices began to rise, fraudsters got more creative. Fake apps and social media accounts began to emerge, as did multi-level marketing (MLM) ponzi scams like BitConnect. Unscrupulous fraudsters have found easy pickings taking advantage of new investors eager to “strike it rich” with a technology of which they have little to no understanding.

The most infamous crypto scam in India to date was GainBitcoin, founded by Amit Bhardwaj in 2013. Operating as a multi-level marketing company, GainBitcoin promised users an exorbitant 10% monthly return on their investments plus bonuses for every person an investor signed up under them. The scam reportedly defrauded thousands of investors out of an estimated Rs 2,000 crore – $296 million at current rates.

While countries like Switzerland, Malta, and Belarus have embraced cryptocurrencies with open arms, India remains at loggerheads with the technology. During his budget speech in February 2018, Finance Minister Arun Jaitley was bluntly clear on the government’s stance on cryptocurrencies:

The government does not recognise cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system.

India turned the screws on crypto even more when, in April 2018, the RBI (Reserve Bank of India) banned all banks and other RBI-regulated entities from “[dealing] with or [providing] services to any individual or business entities dealing with or settling [virtual currencies].” In the wake of the ban, some crypto exchanges shut down altogether while others contemplated relocating operations to friendlier climes.

If the RBI thinks that the ban will stifle interest in cryptocurrency within the country, they are in for a disappointment. Despite the ban, India still accounts for roughly 10% of the Bitcoin market and 6% of the total cryptocurrency market. Ironically, trade volume actually increased following the RBI’s announcement. Some people attribute the increase to investors scrambling to take advantage of the 3-month grace period before the ban goes into effect while others credit the tenacity of the country’s several million crypto investors.

Several exchanges and a number of individuals acting on their own behalf are challenging the ban, arguing that it is unconstitutional. Anirudh Rastogi, a managing partner at TRA, a law firm that represents several local crypto exchanges, said:

It has come with this overarching order that can be challenged on several counts. There is a right to trade, and it cannot be restricted in absolute terms. Only reasonable restrictions can be imposed and applied but a complete prohibition as restrictive as this was unnecessary.

Since the RBI’s announcement, many Indian exchanges have reached out to the government seeking a compromise – increased regulation and transparency – rather than an outright ban on cryptocurrencies. Rastogi clarified:

A ban is counter-productive, therefore, we have suggested that there should be appropriate regulations that can address the government or the central bank’s concerns.

What are your thoughts on India’s attitude towards cryptocurrencies? How can the recent rash of crypto crimes in the country be addressed? Let us know in the comments below.

Images courtesy of Shutterstock, Bitcoinist Archives

The post India Hit with Crime Wave as Cryptocurrencies Continue to Gain Popularity appeared first on Bitcoinist.com.

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