Users of the Indian cryptocurrency exchange CoinDCX are struggling to understand the company’s policy on restricting crypto withdrawals, due to conflicting information from the exchange and India’s patchy crypto regulations.
While users on the social media platform X have complained that their crypto and INR withdrawals are not being processed in a timely manner, CoinDCX clarified that crypto withdrawals are restricted for reasons relating to user safety and compliance.
In response to The Hindu’s question, CoinDCX co-founder Sumit Gupta said that the crypto exchange strictly complied with Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) guidelines set by the Financial Intelligence Unit (FIU).
Gupta claimed that “unrestricted crypto withdrawals” could expose exchanges to danger and put their bank accounts at risk.
“For instance, bad actors could deposit INR and withdraw crypto for illicit purposes, potentially leading to the freezing of our bank accounts by legal authorities where we hold user INR funds. That’s why we’ve taken a conservative approach to withdrawals, prioritizing the safety of user INR funds,” said Gupta in an emailed statement.
“For the safety of the majority of our userbase, we are forced to disable crypto withdrawals for all users. Users still have the unrestricted access to make INR withdrawals though,” he confirmed.
However, one source of confusion is that the CoinDCX website included a list of crypto assets that could be withdrawn, including cryptocurrencies such as ETH, even after Gupta’s statement confirming that withdrawals were restricted.
Adding to this, some users complained they were unable to access the “withdraw” option for crypto on the CoinDCX platform, while at least one CoinDCX user could see this option.
Furthermore, the CoinDCX Cares support account on X noted that crypto withdrawal access could be enabled in some cases if the users passed checks by the team. It also noted that other CoinDCX accounts might be associated with banking facilities that did not support crypto withdrawals.
Screenshot of a post from the CoinDCX Cares handle | Photo Credit: CoinDCX Cares on X
CoinDCX is developing an opt-in feature with improved diligence that will allow crypto withdrawals in a phased manner, Gupta confirmed to The Hindu.
CoinDCX later confirmed through a communications representative that the restriction on crypto withdrawals has been in place since the second half of 2023, and that the decision is not related to WazirX.
On December 21, the CoinDCX Cares X handle posted that there was a delay in addressing support tickets and that it was “experiencing a higher volume than usual.”
X users in the responses complained about locked funds and tickets going unaddressed.
On January 3, a notice on the CoinDCX website stated: “Downtime Alert : We are currently experiencing issues with KYC and PAN verification. Our teams are working diligently to resolve these at the earliest.”
CoinDCX’s Gupta on December 30 expressed his sympathy for crypto investors who had been affected by the WazirX cyber-attack on July 18.
WazirX has locked up users’ crypto as it pushes for restructuring in Singapore while investors grow more desperate about missing out on crypto price jumps. The security breach has spooked many other Indian investors, causing them to question whether their funds are safe or if potential crypto litigation concerning their assets will even take place in India.
Gupta said that CoinDCX was willing to step in and help out WazirX if needed, including by possibly deploying some capital.
According to its website, CoinDCX has over 1.6 crore registered users.
Published - January 03, 2025 02:23 pm IST
