The Indian crypto community received some shocking news on 30 March when Coindelta, an Indian cryptocurrency exchange, shut down its services abruptly. This news came after the Supreme Court of India adjourned the ‘Crypto v. RBI’ case within minutes of hearing and postponed it till July. This not only disappointed crypto enthusiasts in the country, but also allegedly contributed to the shutdown of exchanges like Coindelta.
However, as the exchange announced that it would shut down operations on 30 March and suspend wallet services by 29 April, users were in for a shock as withdrawing their digital currencies became an expensive task. Users claimed that the exchange raised its withdrawal fees and was charging an exorbitant amount for withdrawal of any cryptocurrency following the shutdown.
@Cryptooindia shared a post on the hiked withdrawal fees and highlighted how Zebpay, another cryptocurrency exchange, pulled a similar trick when it ceased operations in India. It compared the withdrawal fees of Coindelta to Binance, the world’s largest cryptocurrency exchange. CryptoIndia YT tweeted,
This has become a common practice by Indian Exchanges – Increase withdrawal fee for users when exchange decide to close operations.@zebpay did this and got away – Now similar stunt is being pulled by @coindelta_
Charging min 3-5x withdrawal fee.
And nobody speaks about it. pic.twitter.com/yszMvz7UIt
— CryptoIndia YT (@CryptooIndia) March 30, 2019
A Quora user, Naif Amoodi, found this move from Coindelta’s end unprofessional and urged them to be ‘professional’ and resume trading for at least a month. This move would help users swap their holdings for one cryptocurrency and withdraw with a single withdrawal request. Amoodi highlighted the spike in withdrawal fees and presented a few examples,
“Bitcoin: 0.0020 BTC / Rs.600 (previously just 0.0005 BTC)
Litecoin: 0.05 LTC / Rs.225 (previously just 0.002 LTC)
Lumens: 28 XLM / Rs.225 (previously just 0.01 XLM)
Ether: 0.03 ETH / Rs.300
XRP: 10 XRP / Rs.230
EOS: 0.8 EOS / Rs.250
He explained in his post that NEO’s withdrawal would be in multiples of 1 and that if any user had less than 1 NEO. “then you cannot withdraw your holdings and Coindelta will keep this. If you have 1.9 NEO, then you can only withdraw 1 NEO and Coindelta will keep the rest.”
This would mean that any amount of cryptocurrency lower than the withdrawal fee would remain with the exchange, prompting many Indian crypto enthusiasts to brand it as an ‘exit scam.’ According to him, Coindelta must let users swap their cryptocurrencies for a uniform one, before suspending trading on its platform. He added,
“If Coindelta does not comply then it would be apparent without any doubt that they are orchestrating a very clever exit scam. The fact that they increased the withdrawal fees so significantly just further strengths this assertion.”
Other cryptocurrency exchanges like WazirX and Bitbns cashed in on this and offered relief to Coindelta users by promising a refund of the withdrawal fees they paid at Coindelta, if they transferred their funds to their exchanges. However, this offer came with strings attached. These exchanges required deposits to be worth at least Rs 25,000 [approximately $361] for claiming the withdrawal fees.
A Twitter user @Satishraj_MP learned this the hard way. The user transferred Rs.2,500 worth of crypto from Coindelta to WazirX, knowing that the criteria to get 100% refund was to deposit crypto worth Rs. 25,000. When he asked for a refund, he received the following reply from WazirX,
“Hi! Sorry to disappoint you. The minimum value of the funds deposited should be 25,000 INR in order to be eligible for the fee refund. Thanks!”
Other users also directed their anger at Coindelta. @strawpanty tweeted,
“The withdrawal fees are humongous. Lost about 500 plus rupees on withdrawal of 7k worth of currencies. Not to mention that I’m unable to withdraw lower value currencies like golem and cindicator due to the overwhelming fee. #Disappointed #cryptocurrencies”
Another Twitter user @Tabrez44455383 expressed anger over Coindelta’s exit performance. The user tweeted,
“I use to love CoinDelta but now hate it. Not just because it is closing but because you have increased the withdrawal fee of tokens drastically compare to normal fee or other India or Foreign exchanges.
Do not come back ever!!!”
While some users did justify Coindelta’s decision to call it quits, many were enraged over the withdrawal fees fiasco. However, the lack of regulations around cryptocurrencies has not only led one of the few exchanges in India to bid adieu to the ecosystem, but also discouraged crypto users from trusting an exchange.
Such incidents are indicative of the fact that India needs cryptocurrency regulations to not only make trading legal, but also to curb such practices. Due to a lack of regulations and the RBÍ’s ban on trading, blockchain technology and the cryptocurrency industry will be dead, if circumstances in India don’t change soon.
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