Imagine being locked out of your own savings account by your bank with no access to your money and no proper response to explain this action from the bank.
This is somewhat similar to the situation that most users of cryptocurrency exchange and wallet service Bitcoin India are going through. Bitcoin India, headquartered in Andhra Pradesh’s Prakasam district (about 350 km southeast of Hyderabad), is one of the few platforms in India that supports multiple cryptocurrencies including Bitcoin, Ether, Dash, Litecoin, and others. It also offers Bitcoin mining subscription plans.
Traders and investors on the Bitcoin India platform have been locked out for nearly a month and were unable to withdraw or transact on their accounts. Several of the accounts, some of which have fiat and cryptocurrency worth nearly Rs 50 lakh, show zero balance.
Fiat currency refers to currency legally issued by a government and, in this instance, refers to the Indian rupee. Cryptocurrencies are digital or virtual currencies that are traded and transacted through exchanges. Most cryptocurrencies work on blockchain technology and the most popular one is Bitcoin.
“I have around Rs 10 lakh in cash and Rs 30 lakh worth of cryptocurrencies locked in my account since November. I could have easily made Rs 5 lakh in profit if I was able to access and trade in my account,” Durgesh Pandey, a cryptocurrency trader from Mumbai with a Bitcoin India account, told FactorDaily.
Bitcoin and altcoins (cryptocurrencies that came after Bitcoin) have been on a bull run off late. On January 1 this year, the market cap of altcoins was at around $2.18 billion. The latest data, as of December 21 shows it at over $313 billion, according to Bitcoin tracker Coin Dance. For the same period, Bitcoin’s market cap climbed to over $245 billion from $16.28 billion.
This sudden rise in price and popularity of Bitcoin and altcoins has made it a prime target for hackers and scamsters across India. This June, a Bengaluru techie was robbed of Rs 1.2 lakh worth of Bitcoins by hackers. The infamous Bitcoin ponzi scheme run by Amit Bhardwaj through his company Gainbitcoin has many victims across India.
Even though several such schemes try to operate below the radar of regulators, some get busted: like in the case of cryptocurrency scheme OneCoin in which the Mumbai Police made 23 arrests and said its promoters amassed nearly Rs 75 crore. Ditto with ATCcoin, where the Economic Offences Wing of the Mumbai Police registered a case against Subhashchand Jewria, the founder and director of ATC Coin, for illegally collecting and diverting funds around Rs 85 crore in five months.
According to multiple investors on the Bitcoin India platform, the lockout began in September when they began receiving messages and pop-ups saying that they have been logged out of their accounts due to suspicious activity or exceeding trade limits. Investors insist there was no clause in their agreement with Bitcoin India of the limit on trades.
“I had joined Bitcoin India because they showed better rates for cryptocurrencies and had also offered more cryptocurrencies to trade. We were also able to do multiple trades and company had said that we were allowed to do unlimited trades on the platform,” said Devendra Singh Bisht, a Delhi-based networking engineer. Bitcoin India told him he had crossed his buy-and-sell limit.
FactorDaily has reviewed communication to investors from Bitcoin India and seen screenshots of locked accounts but has not been able to get a response from the company. A call, email and message to its founder Reddy didn’t elicit any response.
It is not immediately clear how many investors have been affected. FactorDaily has reviewed at least three WhatsApp groups of investors who say they were locked out of the platform.
“There was no way to get in touch with company. Sykam Reddy had stopped responding to calls. He posted a video on YouTube telling that there is a technical problem and it will be resolved soon,” says Pandey.
According to some on one of the WhatsApp groups, Reddy works in Prakasam while others says he operates out of Chennai. In one of the YouTube videos, Sykam seems to be working at the T-Hub co-working space in Hyderabad. “This made it very difficult for the investors to visit him or the company’s office in person and there was no way to communicate with the company or Sykam other than the support tickets which were hardly answered,” said Bisht.
Reddy in the video says the Bitcoin India support team has been flooded with user requests and hence is taking time to reply and clear them. In a press release on Thursday, Bitcoin India said: “…due to recent unexpected user growth that is driven by soaring demand in Asia to buy/sell digital assets, which lead us to get huge number of support tickets all of sudden, we are currently experiencing delays resolving support tickets. Our team is working through these tickets as quickly as possible and we are adding additional resources to get through the backlog.”
Early last week, some Bitcoin India users were able to login to their account in batches, but now came a new problem the account information was missing. “My account showed zero balance. There is no currency or cryptocurrency listed in it. Also, all my transaction history has been wiped off,” says Pandey. Others reported the same problem. In another release, Bitcoin India has said the issue of accounts showing a zero balance would be resolved by 10 PM, Thursday.
Some others had better luck. A few users have been able to login to their accounts with their balance and make withdrawals
“The problems are fixed only for a small group of people and majority of us still are unable to see a balance and make any transaction or withdrawals,” says Pandey, who tried to file an FIR. But the police refused to accept his complaint and instead, he says, questioned him on why he had invested in bitcoins.
Some users have registered a complaint with the Delhi Police’s cyber crime department which has a dedicated page and format for registering crimes related to bitcoins and cryptocurrencies.
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Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.