Just around the time Bitcoin exchanges are being raided in India by IT officials and being checked by SEBI and ED for tax evasion and potential economic, legal, customer protection and security related risks, several users of Hyderabad-based Bitcoin India, holding bitcoins worth several lakhs of rupees, got locked out of their accounts.
The users have either been locked out of their accounts or have been unable to deposit or withdraw from it. The panicked users took to social media to express their distress and fear of being cheated by the startup. Some users even showed up at the registered office of the company in Hyderabad demanding a response.
“Account is blocked for past one month. Raised tickets but no response. My account shows zero balance and unable to see account balance, please explain when will you clear my account,” a user asked on Facebook.
According to a report in FactorDaily, several of the accounts, which have fiat and cryptocurrency worth nearly Rs 50 lakh, show zero balance.
But their money is safe and it’s just a technical issue, said Sykam Ramakrishna Reddy, founder of cryptocurrency exchange and wallet service Bitcoin India, who spoke exclusively to TNM.
“We have limited manpower and can only handle around 200 users at a time. However, over the past few months, bitcoin has been trending and the number of users grew 200 times but our staff strength was still the same. That’s when we started struggling and have not been able to answer queries fast enough,” he says.
Why users have been locked out
One of the main issues being faced by most users of Bitcoin India was that their accounts either showed zero balance or they were unable to access their accounts.
This, Sykam says, is because when users try to trade several times (buy and sell) on a single day from an account, the server flags the account as suspicious and temporarily bans it. Once restored, if the user tries to trade multiple times again, the account is banned again and requires the Bitcoin India team to personally review the account and ensure it’s not fraudulent before releasing it.
Despite nearly 1,000 people posting on Facebook Live asking for resolution of this issue, Sykam claims that only 70-80 users have been locked out due to suspicious activity.
Sykam told TNM and its users on the Facebook Live that the issue will be resolved by the end of Friday. And to avoid such issues in the future, Bitcoin India has restricted its users from buying and selling more than two times.
There have also been issues with withdrawals and deposits. Sykam claims that the withdrawal issue should be solved in the next 48 hours while deposits will take a little more time.
Facing severe backlash from users, including a few news reports about Bitcoin India not responding to its users, Sykam also went live on Facebook to assure its users that Bitcoin India was not a fraudulent company.
Bitcoin India is currently facing a scalability issue. Being a startup, Sykam says that all the work, including responding to each customer ticket is done manually, which is why the company hasn’t been able to answer for a few weeks now.
“We have more 10,000 to 15,000 support tickets that are yet to be answered and around 40,000-50,000 messages on WhatsApp. As we are clearing old queues, new ones are coming. We have in fact limited a few features on our platform and deployed manpower from there to clear queues. We are not robots. There are different kinds of issues from different kinds of users speaking different languages. We need to understand each of them manually and resolve them,” he adds.
What added to the tension for users and for the startup, were news reports over the past week about IT officials conducting raids at Bitcoin exchanges. Sykam says fearing action against their company as well, several employees decided to take leave and not show up for work, making matters worse for the company.
Founded by Sykam in 2014, Bitcoin India is one of the few bitcoin startups in India that support multiple cryptocurrencies including Bitcoin, Ether, Dash, Litecoin and offers Bitcoin mining subscription plans. It has a wallet and allows trading on its platform. Sykam also happens to be state secretary and official spokesperson of YSRCP Sevadalam Tamil Nadu.
Currently the hottest form of investment, the digital currency Bitcoin has been on a bull run since the past year, having soared more than 1,300% to nearly breach the $20,000 mark. However, as the rally began to lose some steam, it slumped nearly 30% in less than a week to as low as $13,130 on Friday.
Bitcoin India is now in the process of hiring more employees, especially for its customer service team to be able to handle the increasing traffic.
“We are learning from experience. We are hiring 50-100 more employees and hopefully by end of January, customer services will be back to normal. In terms of the infrastructure being able to handle traffic, that issue is already being looked at and will be solved in no time,” he adds.
By the end of next year, Bitcoin India will be increasing its employee strength to at least 3000 employees.
“Not sure if we should be happy for having so many users or regret that we aren’t equipped to serve them,” Sykam says as the startup struggles to restore normalcy and customer trust.