Bitcoins might be very much the lingo of Silicon Valley or New York but crypto currency quickly spread like wildfire across the rest of the world
By the end of 2021 India had 15 homegrown cryptocurrency exchange platforms with more than 10 million users..
Some hailed it as a brave new financial revolution. But where there’s big money to be made, and made fast, there will also be people playing fast and loose. Just as crypto grew by leaps and bounds in India, so did crypto crime.
This is Sandip Roy in Kolkata
Political economy journalist Mitali Mukherjee is the author of the new book Crypto Crimes - Inside India’s Best Kept Secret.
She says crypto found fertile soil in India. Like the trader she met who grew up not poor but modestly where every financial decision had to be weighed.
MM1: Should we buy a one liter packet of milk or a half liter packet of milk, depending on your monthly, you know, household ration funds at that point?, and that's something that made him really passionate about the idea of even opening that avenue of financial, um, investment or making more money What can we do to sort of democratize the process
And people heard from friends that they had made quick profit. And their interest was piqued.
MM2: Now, here, you had a situation where you could pretty much as a young 23 year old who didn't have too many savings, put in like ₹10,000. Um, and then, you know, you you make a little bit on that and then you make a little bit more on that.
Unlike financial markets this was open 24x7. It was just an app on their phone. And there weren’t really any barriers to entry even if you didn't come from the big cities.
Cryptocurrency’s fastest growth was happening in second and third level cities. Even in rural India. And it led to some fascinating encounters. Imagine the Wild West but with cryptocurrency.
MM3: And it's this, this man called Bunty, based in Uttar Pradesh, who is this small time sort of petty thief, if you will, who befriends another man and finds out that he has this, this mythical creature called crypto, with which he's made a lot of money on his phone.
So Bunty heads over to this man’s house.
MM4: he arrives there with a katta, which is a basically, you know, a revolver as it's called in local language. There holds that to his head and says, now you transfer all your crypto coins from your phone into my account
Mukherjee says as soon as she heard the story of Bunty and the great crypto hold up she understood now New age technology was meeting age old crime modus operandi.
many people were worried that crypto currency was a big part of terror financing. But as she started digging Mitali found there wasn’t much data on that.
Where crypto crime was booming in India was ransomware
MM5: essentially it means I hack into your system, I take control of your data, and I scramble it, which means that you can't access or read any of your sensitive files. And I've locked it. Um, and I say that, you know, I will only hand you the key back or unscramble this in return for money, which is almost 99% of the time in cryptocurrencies.
What shocked her was the who’s who of Indian companies seem to have fallen victim. Big supermarket chains, huge corporations, even some of India’s premier hospitals. And they had never made it public.
MM6: in many cases, it wasn't clear how that data was finally retrieved, you know, and it seemed like payment had been made. Ransomware, I think, is the one space that's still growing even in 2023.
It’s grown so much the hackers have even set up a customer service to help the digitally clueless pay their ransom in cryptocurrency. And there’s no one holding anyone accountable.
Pyramid schemes, WHatsApp scams. Basically all the old con games now found their crypto avatars.
MM7: greed is a very powerful, motivating force.
As a police officer told her they are both greedy - the complainant AND the criminal.
Unfortunately says Mukherjee it’s not clear how India wants to deal with its crypto problem. Except to tax the proceeds heavily.
MM8 : there's a 30% tax on crypto now. And that really, really came down very hard on trading sentiment
Crypto traders are confident it will bounce back. The government talks about a crypto bill but hasn’t delivered. And no one can agree who should regulate it. So the future of ctrypto in India?
MM9: So I would say it's a big fat question mark.
This is Sandip Roy in Kolkata for KALW