CoinDCX Denies Being Under Legal Scanner Over Fraud: Details

Sumit Gupta, the CEO of CoinDCX crypto exchange has refuted claims that it has allegedly defrauded some of its users. This response came after media reports citing anonymous police officials from Delhi claimed that CoinDCX asked users to pay extra money to process withdrawals – with a promise of tax deduction and refund from the company. As per Gupta, it was not CoinDCX but other fake websites named similar to CoinDCX that were fueling this chaos.

“We’ve learnt of users having reported fraud related to the use of CoinDCX’s App through the recent media outlet’s article. We would like to confirm that no such incident has occurred on the CoinDCX App or website and this issue appears to be unfortunately a case of fake website scam which is rampant in the industry. It’s important to note that several fake websites/URLs are in operation, mimicking financial apps to deceive users, a challenge faced by many fintech players and financial apps including crypto apps. Swiftly, we have reported these threats to CERT,” Gupta wrote in a detailed X post.

Screenshots now emerging on X show potential victims complain about CoinDRX and not CoinDCX.

As of now, Delhi Police have neither accepted nor denied opening a probe on this crypto exchange. More details on the same remain awaited.

Here’s What Happened:-

A story by Indian Express claimed that CoinDCX was being investigated after multiple users lodged complaints against the platform. Citing details from the FIR, the media house reported that a primary inquiry in the case has identified a cognisable offence and is now lining up victims to understand if CoinDCX duped its users via fraud – asking users to deposit an extra lump sum from which it would deduct the taxes and refund the rest before letting them withdraw their investments.

Users of the exchange who were worried they could be victims of a financial fraud initiated by the industrially-stressed exchange, unleashed onto India’s crypto sector via social media.

Reacting to the situation, CoinDCX’s CEO further said, “We take any reports of fraudulent activity seriously and have in fact been working with the cyber cell and MeITY on such matters. Our top-notch security team conducts rigorous checks and has uncovered over 80 fraudulent websites/URLs in the recent past masquerading as CoinDCX exchange. We have stated this before and want to reinforce again: the safety and security of users’ funds are our absolute top priorities.”

The confusing turn of events come at a time when the Indian government is seemingly tightening its noose around crypto players, as legal requirements for these firms to adhere to are gradually being announced in the nation.

Virtual asset service providers (VASPs) in India, for instance, have already been brought into the ambit of the Anti-Money Laundering and Counter-Financing of Terrorism (AML-CFT) framework under the provisions of the Prevention of Money Laundering Act (PML) Act in March 2023. All crypto-related firms operating in India have also recently been directed to register themselves with the Financial Intelligence Unit (FIU) to deem their operations legal in the country.

As part of compliance action against the offshore entities, the FIU has issued show cause notices to nine offshore VASPS under Section 13 of the Prevention of Money Laundering Act (PMLA). These companies are Binance, Kucoin, Huobi, Kraken, Gate.io, Bittrex, Bitstamp, MEXC Global, and Bitfinex.

For the meantime, the FIU has urged India’s IT ministry to block the URLs of said entities that are operating illegally without complying with the provisions of the PML Act.