MADE IN CANVA
There is some amount of responsibility that comes with being an important financial entity, especially when it comes to providing security to customers. This also compels more people to perceive it as a scheme to take your money and disregard the industry. In recent months major Crypto Exchanges have been at the center of scams that have propagated through their services.
From wazirx.com
The big build-up of the WazirX propagated Scam results in drug laundering!
WazirX is India’s largest Crypto Exchange and one of the first to endorse the use of cryptocurrencies and ask the government for proper regulation around them. This, in turn, has painted a rosy picture of the company as a proponent of decentralized finance and all its innumerable benefits.
However, WazirX was not in the clear before finding out that the infamous Indian Exchange willingly or unwillingly contributed to the smuggling of drugs.
— @dir_ed
It was already on the watchlist of the ED (Enforcement Directorate) after unveiling a money-laundering scheme that involved said Exchange to a great degree. The particular allegation as they have stated involves transferring Rs 2790 crores ($380 million dollars) worth of cryptocurrencies to illegal Chinese online betting applications. China’s recent crackdown on Bitcoin has also fueled illegal methods of obtaining cryptocurrencies to a great extent. WazirX was not the only major Exchange involved in this as wallets from Binance were also being utilized to store these illegally acquired tokens.
The ED had supposedly notified WazirX about the show cause notice which would ask them to justify their actions. However, Founder Nischal Shetty, denied that any such notice was provided to the company. This inconsistency in the messaging between the two has been a concerning issue.
Not even 2 weeks after the money laundering allegation a new case involving WazirX and an underground drug circuit. The main culprit behind this racket was Makarand Pardeep Adivirkar also know as the “Crypto King” for paying dealers in European countries in Bitcoin via the dark web. Blockchain technology certainly has privacy benefits that can be exploited to incite such acts. Fortunately, this was exposed and the man in question has been put behind bars thanks to the Narcotics Control Bureau (NCB) unit in Mumbai.
According to WazirX, they perform strict KYC (Know Your Customer) compliances and are sure that this person in particular is not a user of their services. Although they have not provided any precise evidence that backs their claim.
There are not that many Crypto Exchanges in India as it is quite recently been adopted and the fact that WazirX is a major Exchange acquired by Binance poses a valid question as to why would such a person use the services of a well-known company. If this is proven, then it seriously jeopardies the legitimacy of Crypto Exchanges that have already been looked down upon.
From binance.com
Binance and Kraken wallets being used for fraud in the UK!
TSB or Trustee Savings Bank in the UK has decided on imposing heavy restrictions on crypto-related transactions due to fraud cases resulting from digital wallets. Digital wallets are not the best when it comes to security, although they are very accessible and convenient. This ban will bar approximately 5 million customers in the UK from using cryptocurrencies to transact. Binance and Kraken rank top in the world when it comes to Crypto Exchanges with the highest trading volume. TSB has also claimed that the Exchanges have not put much effort into rectifying the situation in addition to not taking any strict action against this issue which is a matter of concern.
This is not the first time banks in the UK have had problems with crypto-related frauds which has certainly affected their opinion of cryptocurrencies. This might also further the agenda of the UK or specifically England to adopt CBDCs (Central Bank Digital Currency).
There should certainly be more accountability taken by major Crypto Exchanges that are involved in such cases. Not being transparent reflects poorly on the company and compromises the trust of many individuals looking for an alternative during trying times. Despite how great the technology is, it is still a risk for people who can’t afford to be scammed. Fortunately, there will be more institutions in the future that will improve upon the flaws of the current wave of Crypto Exchanges.
PUBLISHED BY
DWAYNE D’CUNHA, WRITER ON MEDIUM.
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Should Exchanges be held Accountable for Scams related to Cryptocurrencies? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.