Delhi Court Recommends CBI Probe Into ₹2,000 Crore WazirX Crypto Scam

A Delhi court has recommended that the Central Bureau of Investigation (CBI) take over the investigation into a ₹2,000 crore cryptocurrency scam involving WazirX, one of India's largest crypto exchanges. The court's suggestion comes amid growing concerns over the alleged fraud, which has left numerous investors in financial distress. The case involves significant sums of money and has drawn attention to the regulatory challenges surrounding the cryptocurrency industry in India.

The case is tied to a massive hack that hit WazirX on July 18, 2024, when nearly $235 million (roughly ₹2,000 crore) worth of cryptocurrency was stolen. WazirX, operated by Zanmai Labs Pvt. Ltd, had quickly filed a complaint with the Delhi Police’s IFSO unit after discovering that their Multi-Signature Wallets, which store customer crypto funds, had been drained. Last year, Delhi Police arrested a man named SK Masud Alam from West Bengal for his role in a major hacking case. He was accused of using a fake name, “Souvik Mondal,” to attack a WazirX account.

On May 1, Additional Sessions Judge Sumit Dass reviewed the bail application of SK Masud Alam, one of the key accused. Alam, who has been in jail for over eight months, has had previous bail pleas rejected. The judge expressed concern that the case may involve a wider criminal network, potentially with international links or even state support. He noted that the technical nature of the hack and the scale of the theft require deeper investigation, making it more suitable for a central agency like the CBI to take over.

During questioning, Alam reportedly confessed to connecting with someone named M. Hasan via Telegram, who offered him money in exchange for credentials to access WazirX accounts. His account had received crypto deposits worth over ₹91 lakh shortly after being created. Though the court hasn’t officially handed over the investigation, it has sent its order to the CBI Director for consideration. Meanwhile, the bail application for Alam will be heard again on May 19, when more clarity is expected on whether the central agency will take charge.

The court's decision to involve the CBI underscores the complexity and scale of the fraud, which has been described as one of the largest in the country's cryptocurrency sector. The CBI, known for its expertise in handling high-profile and complex cases, is expected to bring a higher level of scrutiny and resources to the investigation. This move is likely to provide a more thorough examination of the allegations and potentially uncover additional details about the fraudulent activities.

The recommendation by the Delhi court highlights the need for stringent regulatory measures in the cryptocurrency space. The lack of clear guidelines and oversight has allowed for such large-scale frauds to occur, affecting not only individual investors but also the broader financial ecosystem. The involvement of the CBI could set a precedent for future cases, emphasizing the importance of robust regulatory frameworks and enforcement mechanisms.

The WazirX scam has also brought to light the vulnerabilities within the cryptocurrency exchange ecosystem. The alleged fraud has raised questions about the security measures and transparency practices of crypto exchanges. Investors have expressed concerns about the safety of their funds and the reliability of these platforms. The CBI's investigation is expected to shed light on these issues and potentially lead to reforms that enhance the security and trustworthiness of cryptocurrency exchanges.

The court's decision to involve the CBI is a significant step towards addressing the growing concerns over cryptocurrency fraud in India. It reflects the government's commitment to protecting investors and maintaining the integrity of the financial system. The outcome of the CBI's investigation will be closely watched, as it could have far-reaching implications for the cryptocurrency industry and the regulatory landscape in India. If proven true, this case could become one of the most significant crypto-related frauds in India.