Crypto Exchanges Under Fire: Hacks, Insider Leaks, and Trust Issues Grow

India’s growing interest in cryptocurrency is being tested, not just by market volatility but by something deeper—trust. Over the past year, several crypto exchanges have reported hacks, fund mismanagement, and even suspected insider involvement. With digital assets already under a legal grey area in the country, these cases are causing concern among both new and seasoned investors, especially in Tier 2 cities where digital adoption is rising fast.

The issue isn’t just technical breaches. In multiple instances, exchanges themselves have come under suspicion. Some platforms faced sudden outages just as token prices dropped, while others cited “technical maintenance” during mass withdrawals—only for users to later discover their funds were inaccessible. In a few cases, investigations pointed fingers at former employees who allegedly leaked security details or helped drain wallets from the inside.

In India, where crypto is largely unregulated and investor protection laws are still forming, these developments hit harder. Cities like Bhopal, Nagpur, Surat, and Jaipur have seen a surge in first-time crypto investors through apps and influencer-led promotions. But when these platforms go silent during crises or fail to explain missing funds, users are left with little recourse. Filing a cybercrime complaint doesn’t guarantee speedy results, especially if the exchange is registered overseas.

This pattern of exchange hacks isn’t new globally. But what’s unique in India is the lack of structured legal protection for users. While SEBI and RBI continue to discuss frameworks, most Indian users remain unaware of how vulnerable their assets are on platforms with poor cybersecurity or murky management.

What makes things worse is the false sense of safety. Many assume that just because an exchange has an app and a social media presence, it’s safe to invest. But without background checks, audits, or insurance for crypto holdings, every deposit becomes a gamble.

As more users from Tier 2 and 3 cities enter the digital investment space, there’s a pressing need for awareness around how to choose a trustworthy platform, identify red flags, and diversify risk. Relying on one app or storing everything in a single wallet—even on a big-name exchange—is proving to be a costly mistake.

In the end, crypto was meant to be about decentralisation and control. But if that control slips into the wrong hands—whether hackers or insiders—investors are the ones left paying the price. Until India has stricter guidelines and user protections, the best defence is digital vigilance.