I've been giving the latest bank fraud issue some thought since I found out about it recently. It has made me and many others in the space question the competencies of cryptocurrency exchanges in India.
There are just a handful of good exchanges and all of them except for Instashift have mandatory KYC procedures in place. But has this helped in curbing fraud? No!
This latest news of fraud doesn't necessary spell doom for the sector but this attack vector wasn't anticipated by P2P exchanges in India.
But since most exchanges from India have a few lakh user signups and generally tend to take your PAN as well as ID information such as Driver's Licence or Aadhaar information, it does come as a shocker that they don't really bother verifying that information.
If they really did do these things then it would've been harder for the hacker to use forged documents to sign up for a legit account and use hacked bank and hacked PayTM accounts to transfer money for his trades.
Now, personally I don't use PayTM for accepting payments and usually prefer Bank Transfer or UPI. I stick to legitimate means of trading and generally keep a record of my trades by trading on exchanges that offer some record keeping or downloading of your data at regular intervals.
Now a few exchanges have also shut down over the past year and many including ZebPay, CoinDelta have pulled somewhat of an exit scam so to speak by charging very high withdrawal fees to their users.
I have always recommended people to use a solid exchange like Binance which has managed to guarantee safety of users funds even when it's been hacked. How can we expect that in an unregulated market like India where some P2P exchanges operate claiming to protect user funds when they can't even do their job of verifying authenticity of users signing up with them?
I've been around in this space long enough to know that it's best to park your funds in wallets that you trust either online or offline such as a Ledger hardware wallet.
I don't trust any exchange from India generally speaking and the latest fraud cases are proof that no exchange in India is competent enough to be trusted with our holdings long-term or for trading securely.
People need to take security very seriously and these matters into their own hands. We cannot be lax about our digital portfolio when there are absolutely no guarantee that it will remain ours when we trust someone else to hold it for any decent period of time.
If you have crypto such as Bitcoin that's worth more than the cost of a hardware wallet then get yourself a hardware wallet. If not at the very least use a highly rated wallet online or on your desktop and ensure you have 2 factor security either via an app such as Google Authenticator/ Authy on your phone or a Yubikey. Not just for your crypto but for all your important accounts.
For now I'm just waiting to find out which exchanges were affected by the fraud in India. I'm sure none of them will come forth and claim it occurred on their exchanges. If this remains the case it's fair to assume that all of them were affected.
Be careful as there's a lot of scams and frauds surrounding cryptocurrencies stemming from India.
If someone can falsify Aadhaar information and create a trading account and use it to scam others then who is responsible for not verifying these instances and ensuring safety of traders? Especially when we live in a country where people don't care about rules and regulations in general.
Good luck with your trades.
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