Indian crypto exchanges WazirX, CoinDCX crash; Twitter weeps over losses

Indian cryptocurrency exchanges WazirX and CoinDCX suffered hour-long outages late on Wednesday as the price of Bitcoin, the world’s leading cryptocurrency, fell sharply to a multi-month low.

Bitcoin has depreciated in value since Monday after Tesla CEO Elon Musk said that the electric car maker would no longer accept payments in Bitcoin because of concerns over the high consumption of electricity for Bitcoin mining. Musk’s endorsement of crypto this year has been instrumental in driving up the prices of Bitcoin to a high of over $64,895, (Rs 47.3 lakh) in April. Experts claim that China’s tightening of restrictions barring payment companies and financial institutions from providing services related to cryptocurrencies has also played a major role in the Bitcoin price plunge.

On Wednesday, Bitcoin’s price tumbled 30% in a few hours to $31,000. As the price was declining, many investors looked to sell their crypto assets to avoid heavy losses but were unable to do so since the servers of WazirX and CoinDCX crashed and denied those trades. Other investors tried to buy cryptocurrencies while the price was low, but the transactions didn’t come through, causing a loss of valuable time before the prices of Bitcoin bounced back to $40,000. Several investors converted their cryptocurrencies to INR and initiated withdrawal requests, but complained that while the amount had been deducted from their crypto wallets, the same wasn’t reflecting in their bank accounts.

Notably, this is the second instance of Mumbai-based WazirX’s server crashing this month, and the third since April. Earlier this month, WazirX faced a severe lag on its mobile application and website, just as the price of Dogecoin, a meme cryptocurrency increased by around 40% in a few hours. As the price of the coin had increased, many investors had tried to sell their dogecoins to make profits. However, WazirX’s server wasn’t able to process those transactions instantly, leading to heavy losses for investors.

The company had said then that the lag had occurred due to a 10x rise in concurrent users which its server was unable to handle. WazirX has explained that recent problems with its mobile application can be attributed to a significant rise in user signups and trading volumes and that the company is scaling up to address these concerns.

On Wednesday, WazirX tweeted, “We’re working on a fix for the issues related to WazirX app/website and will update you as soon as it’s back up.” Since then, there has been no official statement from the company on the issue.

Investors have complained that they’re not able to reap the benefits of cryptocurrencies as an investment class because platforms such as WazirX haven’t been able to offer a satisfactory user experience.

Several users flagged similar issues with another Mumbai-based crypto exchange, CoinDCX which was unable to process transactions while the price of Bitcoin fluctuated late on Wednesday.

Taking notice of user complaints, CoinDCX tweeted on Wednesday, “Due to high user traffic we are aware some of our users like yourself might be experiencing issues related to services on our website and our Apps.”

In a blog post, it added, “We are writing this to ensure that our team has already identified the issues and are working to resolve them at the earliest.”

While Wazirx claims to have 2 Mn users, CoinDCX has 400,000 investors trading on its platform.

This month, it has been reported that several Indian banks have stopped providing services to Indian crypto companies, based on an informal advisory from the Reserve Bank of India (RBI). This despite the Supreme Court in March 2020, overturning RBI’s 2018 circular that barred banks from providing services to crypto exchanges.

ICICI Bank, one of the last few big lenders providing services to crypto companies, has now suspended the current accounts of these businesses. The private sector lender has also reportedly directed payment gateways to shut off its net banking services for merchants buying or selling cryptocurrencies.