{"id":822659,"date":"2025-01-28T11:12:17","date_gmt":"2025-01-28T17:12:17","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2025\/01\/28\/india-clamps-down-on-digital-fraud-as-cases-rise-in-2024\/"},"modified":"2025-01-28T11:12:17","modified_gmt":"2025-01-28T17:12:17","slug":"india-clamps-down-on-digital-fraud-as-cases-rise-in-2024","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2025\/01\/28\/india-clamps-down-on-digital-fraud-as-cases-rise-in-2024\/","title":{"rendered":"India clamps down on digital fraud as cases rise in 2024"},"content":{"rendered":"
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  7. India clamps down on digital fraud as cases rise in 2024<\/li>\n<\/ol>\n<\/div>\n

    In 2024, India\u2019s<\/a> law-enforcement agencies cracked down on several digital assets and finance technology frauds while exchanges and investment platforms grappled with regulatory scrutiny and security breaches.<\/p>\n

    India reportedly<\/a> lost over $44 million in digital asset scams in 2024, ranking fifth globally. It recorded about 840 complaints related to digital assets.<\/p>\n

    \u201cIn 2024, India saw significant crypto-related frauds that deeply impacted investor trust and regulatory sentiment,\u201d said Rohan Sharan<\/a>, founder and chief executive of Timechain Labs<\/a>, an on-chain application development firm utilizing BSV blockchain<\/a> technology.<\/p>\n

    \u201cThese incidents fueled skepticism among regulators and the general public, slowing adoption and making the case for stricter compliance frameworks. The need for platforms offering traceability and transparency is now more critical than ever, and blockchain innovations that focus on these values could be game-changers for the industry,\u201d Sharan told CoinGeek.<\/p>\n

    This year\u2019s most high-profile digital asset fraud was the WazirX<\/a> hack, one of India\u2019s biggest digital asset exchanges by trading volume. WazirX suffered a $234 million breach, allegedly executed<\/a> by North Korean hacking groups, including Lazarus. On July 18, WazirX said<\/a> it lost the amount from one of its multisig wallets, which utilized Liminal\u2019s digital asset custody and wallet infrastructure from February 2023.<\/p>\n

    WazirX halted trading and announced a $23 million reward to help recover the $234 million it lost in the cyber attack.<\/p>\n

    \u201cWe have increased the White Hat Recovery reward to 10%, i.e., up to $23 million. We invite white hat hackers, blockchain forensics experts, and cybersecurity professionals from around the world to join this critical mission and protect the integrity of the crypto ecosystem,\u201d the digital asset exchange said in July on X<\/a>.<\/p>\n

    Amit Kumar Gupta<\/a>, a legal practitioner at the Supreme Court of India, pointed out that the WazirX breach affected both hot and cold wallets and compromised a substantial portion of user funds.<\/p>\n

    \u2018Worrisome, to say the least\u2019<\/strong><\/p>\n

    During the year, authorities intensified their oversight of the digital assets sector. Gupta said investor confidence waned, reducing trading volumes, while exchanges enhanced their security protocols to prevent future breaches.<\/p>\n

    \u201cA $2.8 million crypto scam<\/a> in Andhra Pradesh (in South India) targeted over 320 investors with promises of fixed monthly returns. The fraudulent scheme lured victims through local promotions and fake guarantees,\u201d Gupta pointed out.<\/p>\n

    Next in line was the HPZ Token scam in India, which defrauded investors<\/a> by promising high returns through a fake \u201ccryptocurrency\u201d scheme. India\u2019s Enforcement Directorate<\/a> (ED), the law enforcement and economic intelligence agency, reportedly<\/a> accused multiple suspects of defrauding investors by promising to double their investments through a mobile application, HPZ Token, as well as online gaming and betting websites. The proceeds of crime, in the form of both movable and immovable assets, have been provisionally attached to multiple suspects, including shell entities with links to China.<\/p>\n

    \u201cThe impact is worrisome, to say the least,\u201d pointed out Raj Kapoor<\/a>, founder of India Blockchain Alliance (IBA).<\/p>\n

    \u201cFor a nascent industry struggling to find its niche, these incidents are a wet blanket. High-profile frauds erode trust and damage public confidence in cryptocurrencies, with users questioning the security of exchanges and the lack of consumer protection,\u201d Kapoor added.<\/p>\n

    Fintech token scams, too, took off as fraudsters posed as representatives of a prominent finance technology firm, offering fake tokens promising high returns.<\/p>\n

    \u201cRogue mining schemes reared their ugly head as several fake mining pools claimed to offer shared profits from crypto mining but disappeared after collecting funds,\u201d Kapoor stated. These incidents intensified calls for stricter regulation, particularly around exchange operations and user protection.<\/p>\n

    While the world\u2019s most populous nation is looking to regulate<\/a> the digital assets space, the South Asian nation has informed<\/a> that there is no fixed timeline for introducing comprehensive regulatory guidelines for the country\u2019s Virtual Digital Assets (VDAs). That puts the onus on digital asset exchanges<\/a> and individuals to stay alert and tackle digital assets and related frauds.<\/p>\n

    According to Sharat Chandra<\/a>, founder of EmpowerEdge Ventures and a startup<\/a> enabler, high-profile cases involved scams that exploited regulatory loopholes, leading to significant financial losses for investors.<\/p>\n

    \u201cThese incidents have prompted calls for stronger regulatory measures to protect consumers and enhance the integrity of the crypto market. The impact of these frauds has been twofold: while they have shaken investor confidence, they have also catalyzed discussions around the necessity for clearer regulations and better consumer education within the crypto ecosystem,\u201d Chandra added.<\/p>\n

    Along with the Enforcement Directorate, the Reserve Bank of India (RBI) has been active in identifying and arresting digital frauds. In December, the central bank introduced<\/a> an artificial intelligence\/machine learning<\/a> (AI\/ML)-based model, MuleHunter.AI, developed by the Reserve Bank Innovation Hub (RBIH), to tackle digital frauds. The AI model is also expected to help banks deal with the issue of mule bank accounts<\/a>, a typical tactic fraudsters use to funnel the proceeds of their fraudulent activities.<\/p>\n

    Watch: \u2018Disruptive\u2019 blockchain can be useful for India<\/p>\n