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Binance bleeding cash to Indian crypto exchanges following restrictions


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Binance, the world’s largest crypto exchange, is losing Indian users to its local rivals which were recently dominated by it, with WazirX reporting receiving up to 70 per cent of its deposits from the global behemoth.


The exodus came in the wake of Indian authorities initiating restrictions on Binance and other foreign crypto exchanges operating without local registrations late last December.


The government's actions were further amplified when Apple Inc's App Store took down the apps of Binance and seven other foreign exchanges, following a request from the Indian government.


Deposit inflows surged approximately 250 per cent in the four days following India's compliance show-cause notice to nine offshore platforms on December 28, according to WazirX.


According to Bloomberg, CoinDCX reopened for deposits immediately after the event, experiencing a rapid influx,  said it CEO Sumit Gupta.


Edul Patel, CEO of Y Combinator-backed platform Mudrex, reported accomplishing figures usually achieved in three months within the past two weeks, with over 30,000 new registrations since December 28.


The Financial Intelligence Unit (FIU) in India had last December issued a notice, stating that the nine exchanges were operating illegally in India without complying with anti-money laundering provisions introduced the previous year.


The FIU also requested the Information & Broadcasting ministry to locally block the websites of these platforms. As of Friday evening, their URLs were inaccessible in India, though their apps remained available on Google Play.


WazirX and Mudrex estimate that around 70 per cent of their recent inflows originated from Binance, while CoinDCX suggests a figure of approximately 40 per cent.


Binance responded they were "working hard to inform constructive policy-making that seeks to benefit every user and all market participants" without addressing questions regarding deposit outflows.


Esya Centre, a New Delhi-based think-tank, wrote to India's Ministry of Home Affairs in late October, advocating for restrictions on offshore crypto exchanges not abiding by anti-money laundering regulations.

 

In 2022, Binance Holdings Ltd and its Indian affiliate WazirX went through an acrimonious split.

 

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