Allure Of Cryptocurrencies Remains Even As Lack Of Regulation Spurs Crypto Crimes

NEW DELHI: Several searches were carried out by India’s Enforcement Directorate this month as part of an ongoing investigation into a massive crypto scam involving a phoney cryptocurrency dubbed Morris coin. This was used to deceive investors in Kerala, Tamil Nadu, and Karnataka out of over Rs. 1,200 crore.

Prime Minister Narendra Modi’s official Twitter account was “briefly hacked” last month, with a statement announcing that India has embraced cryptocurrencies as legal cash.

The massive increase in the value of cryptos following the pandemic, as well as the ease of access of various wallets and exchanges, has fueled a huge crypto investment spree. Last year, the worth of some of these fresh cryptos, such as Dogecoin increased by 8,300 percent, surpassing even that of bitcoin. Even as bitcoin prices continue to fall, the allure of cryptocurrencies remains. While it is unclear how several people in India own cryptocurrency, some large crypto exchanges, such as CoinSwitch Kuber, contend to have more than 15 million users.

However, as more people in India trade in various cryptos, cyber criminals are having a field day. According to Chainalysis, the overall value of digital currencies held by illicit wallet addresses went up by 79% last year to $14 billion, up from $7.8 billion in 2020. In 2021, crypto investors worldwide ended up losing over $2.8 billion to various crypto scams. Wallets used for cyber attacks, Ponzi schemes, and other scams are referred to as illicit addresses.

Scammers and hackers have recently targeted crypto owners and investors by stealing cryptos from wallets via spoofing or deceiving people into spending on anonymous or fictitious cryptos such as Morris coin.

In many cases, cybercriminals use channels like Whatsapp and Telegram to defraud young cryptocurrency owners by promising to double their money. “In a few cases, we’ve seen cryptocurrency exchange employees share databases of cryptocurrency owners with cybercriminals, who use this information to launch data breaches using Text messages or even WhatsApp messages with phishing links to takeover crypto accounts,” said Rahul Tyagi, co-founder of Safe Security (formerly Lucideus), a cybersecurity firm to Mint.

Spite of the increasing in bitcoin investments, actual knowledge of cryptocurrencies or their underlying technologies, as well as cybersecurity awareness, is low in India. “Users must understand that, unlike traditional fintech, where a formalised redressal system exists in the event of fraud, there is no way to revive cryptocurrency if you lose track of your wallet or send cryptocurrency to an unintended address,” he stated.

As per N.S. Nappinai, a Supreme Court advocate and the founder of the cyber safety organisation Cyber Saathi Foundation, while attacks on cryptocurrency owners began a few years ago and grew during the pandemic, crypto scams have been around for a long time. “Both are now flourishing,” Nappinai told Mint.

Crypto wallets and exchanges, for their part, have been attempting to educate users about security. Many of them also include features that can help to reduce risks. Most users, according to Tyagi, are unaware that crypto wallets have a feature called whitelisting crypto account addresses. When enabled, it reduces the likelihood of fraud. It’s an optional feature that restricts withdrawals to addresses you’ve specified. “Before investing, users should investigate and comprehend the security and privacy aspects of cryptocurrencies,” he added.

Some experts believe that the lack of crypto regulation in India has exacerbated the risk, as many users are unaware of which coins are legitimate and which are not. Nappinai believes that “at the most fundamental level regulation will ensure that what is permissible and what is illegal is clearly defined. As a result, from the standpoint of an investor, it is preventive and protective. And, from the standpoint of law enforcement, it clarifies their ability to prosecute.”

According to recent reports, India has changed its stance on cryptocurrency and is now pursuing to monitor and control it rather than outright ban it. The Cryptocurrency and Regulation of Official Digital Currency Bill 2021 was listed by the government in the Winter session of Parliament last month, but it was not tabled.

Though scammers and cybercriminals can still be prosecuted under current laws, legislation will help investors to lodge a complaint and ensure that not just anyone can issue new coins and begin collecting money through initial coin offerings. People were too afraid to file a complaint for crypto crimes, according to Nappinai, before a Supreme Court decision on an appeal by the Internet and Mobile Association of India (IAMAI) in 2020.

“The government should make a decision on whether to accept or reject cryptocurrency,” Nappinai said. “If you’re going to say maybe or yes to something, be specific about what you’re going to allow. What are the parameters for releasing a private coin, and what are the investor safeguards in place?” she said.

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