Safeguarding finances

Earlier, people were becoming victims of fraud during digital transactions, and now fraudsters are cheating people by luring them to triple and quadruple their money through crypto. Most of the people who become victims of crypto fraud are educated, including doctors, engineers, administrative officers, politicians, etc.

There is an international network of crypto fraudsters operating from India. However, most of the leaders of such networks live in Chinese cities or Dubai, carrying out fraud incidents. Telegram or WhatsApp groups are also being used for fraud, and often such groups are deleted after committing fraud. One of the main reasons why Chinese people are getting involved in crypto fraud is the significant decline in workers' wages in China in 2023 compared to 2016 and increasing unemployment. The unemployment rate in China was 13.9 percent in 2019, increasing to 16.8 percent in July 2020. Furthermore, it is expected to rise to 19.9 percent in 2022 and 21.3 percent in 2023.

To defraud through crypto, fraudsters first open investors' accounts on an app or portal. The small amount initially invested by investors is doubled or tripled. After gaining trust, investors are asked to deposit large amounts. As soon as investors deposit a large amount into the wallet, it is immediately transferred to another account or put on hold. Generally, fraudsters send the defrauded amount abroad. Such individuals also engage in money laundering (AML) and counter-financing of terrorism (CFT). The Finance Ministry has issued notices to many guilty crypto exchanges in this matter, and the government is working towards blocking the URLs used for fraud.

According to the global blockchain platform Chain Analysis, India has become the second-largest market in terms of cryptocurrency transactions after the US, surpassing the UK, Turkey, and Russia. Cryptocurrency exchanges like Coin DCX, Coin Switch, Wazir X, Buy-U-coin, Zeb pay, Giotas, Unocoin, etc., operate in India. Crypto exchanges function similarly to stock exchanges, aiding investors in buying and selling cryptocurrencies.

Registration is necessary for crypto exchanges to operate in India, but only 31 crypto exchanges have registered with the Financial Intelligence Unit (FIU). Many crypto exchanges are conducting their business illegally in India without registration.

According to a report by cryptocurrency exchange Coin DCX, approximately 60 percent of cryptocurrency investors reside in 10 cities in the country. The five cities with the highest investment in crypto in India are Delhi, Mumbai, Kolkata, Lucknow, and Patna, where 12, 10, 8, 5, and 5 percent of crypto investors live, respectively. It is noteworthy that Patna and Lucknow have emerged as leading cities among Tier 2 cities investing in crypto.

Indian women are also not behind in investing in crypto. According to a report by Coin DCX, there is a ratio of 7 men for every 1 female investor. The top five cities with the highest number of women investors in India are Delhi, Lucknow, Hyderabad, Ahmedabad, and Chennai, respectively. Thirty-five percent of female crypto users live in Tier 1 cities. Delhi has the highest number of women investors. It is noteworthy that despite the provision of a 30 percent income tax on profits, India's investment volume in crypto from July 2022 to June 2023 has been recorded at about USD 269 billion.

However, now in India, crimes like cybercrime, digital fraud, counter-financing of terrorism, and money laundering are also being carried out through crypto. The increasing popularity of cryptocurrency has promoted its use in purchasing illegal activities. Today, cryptocurrency is being used on a large scale in black marketing.

Cryptocurrency is a type of digital currency that is not available in physical form. It cannot be minted in any mint; hence, its transactions are not legal like other currencies. The regulator has no control over this. Most of its users transact anonymously.

Blockchain technology is used for cryptocurrency. Encryption is employed in cryptocurrency, reducing the possibility of fraud through the crypto system. Cryptocurrencies exist in the world in the form of Bitcoin, Cardano, Ethereum, Ripple, Litecoin, Dash, Dogecoin, etc.

Bitcoin is the most popular of these virtual currencies. Cryptocurrency was first used on January 3, 2009, but its popularity started increasing in the year 2012. Today, the value of cryptocurrencies is increasing rapidly compared to other currencies like the Euro, US Dollar, Pound, etc.

At the speed at which digitalisation is taking place across the world, the spread of cryptocurrency cannot be stopped. However, globally there are many countries like India where most people are unaware of the concept of cryptocurrency. Nevertheless, the acceptance of cryptocurrencies is expected to increase in the coming years. The possibility of regulatory scrutiny has increased as the cryptocurrency market continues to expand.

In the changed environment, governments around the world are looking for ways to regulate cryptocurrencies, some of which have created new rules and regulations. The law can bring stability to the cryptocurrency market and help pave the way for its legalisation. Appropriate legislation may also reduce compliance costs.

Today, along with digitalisation, cases of crypto fraud are increasing, and in very few cases, the defrauded amount is being recovered. Illiterate people easily become victims of online fraud, but the matter of concern is that the number of educated people is higher among those cheated through crypto. Today, on the lines of Jamtara, incidents of fraud through crypto are being carried out across the country.

To stop crypto fraud, there is a need to run a financial literacy campaign like a campaign for 365 days across the country. The easiest way to avoid an accident is to be careful. However, one can save oneself from being cheated by giving up greed.

Views expressed are personal