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What Wazirx does to protect investors from crypto scams


The rapid increase in the number of crypto owners in India has led to an immediate need to focus on transaction security and fraud prevention. A massive user base makes effective monitoring and scrutiny difficult, and exchanges that facilitate cryptocurrency trading must always remain vigilant and ensure strict processes that keep crooks at bay.

This fraud awareness week, WazirX, India’s largest crypto exchange, explains how it protects its customers from crypto scams and how investors can stay vigilant.

1. What role does WazirX play in educating investors about scams and fraud?

India does not currently impose any specific AML / CFT standards for crypto exchanges. We, in our effort to make the crypto ecosystem more secure for all stakeholders, are voluntarily following the FATF recommendation on VASPs. We also proactively engage with state, central and international agencies to share and establish international best practices in AML / CFT, as outlined in our first transparency report.
In addition, we comply with BACC’s Self-Regulatory Code of Conduct under the Internet and Mobile Association in the absence of regulatory guidance. On the occasion of #FraudAwarenessWeek, we want to share six key elements of the code of conduct that ensure customer accountability and protection.

• Online verification and KYC mandatory for all clients on our WazirX trading platform

• Controls to prevent fraud and market manipulation

• Audit trail of all transactions

• 100% compliance with all law enforcement agencies and tax authorities

• Investor education and to invest and trade crypto assets

• Grievance resolution and escalation measures

Additionally, to continue our mission of protecting our users and shattering common myths that fuel the negative perception of our various stakeholders, WazirX launched its dedicated policy arm and also released India’s very first Crypto Transparency Report. .

2. What are the top five ways for investors to avoid getting trapped in a scam?

Free money is a misnomer and so is crypto. There may be people online masquerading as public figures and promising you 10x returns in exchange for certain deposits – don’t be fooled.

As an investor, it is your responsibility to exercise due diligence. Before investing in a project, always read its white paper, about the team and its background, the state of development of the project and the team’s social media activity.

It’s also crucial to trade on legitimate exchanges that follow the KYC and AML guidelines. You should also use the official apps. Before downloading an app or connecting via the web, be sure to use “https” and enter the correct web address, or download it from the App Store.

3. What are the red flags in crypto investing that investors should not ignore?

These four events should grab your attention when it comes to spotting red flags in crypto:

• Sudden Price Rise: Crypto coins without fundamental or historical data may show a sudden and significant rise without any warning signals. But the best is to stay put and research it well without fear of losing the rally. The Squid Game Token, for example, hit $ 2,856 within a week of launch and sank as soon as it was declared fraudulent.

• Validation Via Crypto Transactions: Scammers asking investors to verify their wallets by sending them crypto tokens are not uncommon. Such suspicious activity is a reason to exercise caution.

• Promises of high returns with negligible risk: Cryptocurrencies are volatile by nature and require a stomach for risk. If you are promised easy returns with very lucrative terms, this calls for extra caution.

• Social Pseudonyms Overpromotion: YouTube and other social media pseudonyms are often used to mass market a new coin and attract investors. When something seems too surreal, do your due diligence and check before you jump on the train.

4. What are the three most common crypto frauds?

Sometimes, in the pent-up excitement of new coins and the rush to make a quick buck, investors are drawn to harmless schemes on the periphery. Here are a few:

• Global crypto exchanges are teeming with 10,000 crypto coins. While it is true that the lion’s share of the market is occupied by the top 10 coins, investors find the smaller ones attractive under the misconception that they have skipped the opportunity to invest in the larger coins.

Under such circumstances, if someone were to go ahead and create a coin named the same as Ethereum, we would all be fooled into thinking that it is indeed related to the original Ethereum. Designed to defraud people, these coins must be filtered. WazirX believes that due diligence is the primary and most effective method of preventing such crypto coins from being posted on the exchanges in the first place.

• Pyramid schemes are another common method of defrauding people and skimming their hard earned money. Sometimes scammers cajole naïve investors into inviting more people into their network and trick them into believing that as the network grows, they will receive a commission on the business done by new registrants. Investors are guaranteed a 15-20% return on their money to sweeten the deal and trap them.

• A plethora of social media channels and nicks have been created to mislead people into promising high returns on their investment. Such handles are designed to look legal and welcoming with seemingly legitimate cryptocurrency messages. If an investor has not explored their track record, it is likely that their money will fall into the hands of fraudulent wallets which will ultimately be lost on the blockchain.

As an investor, you should always be sure of the terms and underlying fundamentals of every investment.

To note: This is a partnership article and the answers to the questions were provided by the WazirX team


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