# India Uncovers Crypto Exchange Practices Mirroring FTX Vulnerabilities ▴ News

**Published:** 2025-09-07
**Categories:** News

---

The recent findings by India’s Income Tax Department expose critical vulnerabilities within the nation’s crypto exchange ecosystem. The practice of reusing customer tokens for lending, staking, and liquidity provision without explicit investor consent creates a systemic fragility akin to the conditions preceding the FTX collapse. This operational opacity, exacerbated by a current [regulatory vacuum](https://prime.greeks.live/area/regulatory-vacuum/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite), elevates [institutional risk](https://prime.greeks.live/area/institutional-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) for retail investors who often remain unaware of their assets’ rehypothecation.

The absence of a clear legal framework prohibiting such practices allows exchanges to operate with significant discretion over client funds. This situation necessitates the accelerated development of a comprehensive [Digital Assets Act](https://prime.greeks.live/area/digital-assets-act/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) to enforce transparency and accountability, thereby safeguarding market integrity and investor confidence.

India’s crypto market faces systemic risk due to unregulated customer fund rehypothecation, necessitating immediate regulatory intervention to prevent catastrophic failures and restore investor trust.

- **Core Vulnerability** ▴ [Customer token reuse](https://prime.greeks.live/area/customer-token-reuse/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite) without explicit authorization for lending, staking, and liquidity.

- **Regulatory Gap** ▴ Absence of an explicit legal framework prohibiting these practices in India.

- **Investor Awareness** ▴ Only 22% of Indian crypto exchange users understand client fund rehypothecation.

Signal Acquired from ▴ <a href="https://pintu.co.id/en/news/202266-5-surprising-things-buy-today-with-crypto?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" target="_blank" rel="nofollow">Pintu News</a> 

![A sleek, light interface, a Principal's Prime RFQ, overlays a dark, intricate market microstructure. This represents institutional-grade digital asset derivatives trading, showcasing high-fidelity execution via RFQ protocols](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-prime-os-execution-system.jpg)

![Precision interlocking components with exposed mechanisms symbolize an institutional-grade platform. This embodies a robust RFQ protocol for high-fidelity execution of multi-leg options strategies, driving efficient price discovery and atomic settlement](https://options.greeks.live/wp-content/uploads/2025/07/precision-institutional-digital-asset-derivatives-execution-platform.jpg)

## Glossary

<a href="https://prime.greeks.live/area/institutional-risk/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Abstractly depicting an institutional digital asset derivatives trading system. Intersecting beams symbolize cross-asset strategies and high-fidelity execution pathways, integrating a central, translucent disc representing deep liquidity aggregation](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-ecosystem-unifying-rfq-protocols-for-high-fidelity-execution-and-deep-liquidity-aggregation-across-multi-leg-spreads.jpg)

## Institutional Risk

Meaning ▴ Institutional risk refers to the aggregate potential for adverse outcomes stemming from an institution's engagement in financial markets, specifically within digital asset derivatives, encompassing operational, credit, market, liquidity, and systemic exposures that can impact capital, reputation, and strategic objectives. </a><a href="https://prime.greeks.live/area/regulatory-vacuum/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision-engineered interface for institutional digital asset derivatives. A circular system component, perhaps an Execution Management System EMS module, connects via a multi-faceted Request for Quote RFQ protocol bridge to a distinct teal capsule, symbolizing a bespoke block trade](https://options.greeks.live/wp-content/uploads/2025/07/precision-engineered-interface-for-institutional-digital-asset-derivatives-request-for-quote-protocol-high-fidelity-execution-within-principal-operating-system.jpg)

## Regulatory Vacuum

Meaning ▴ A Regulatory Vacuum describes a market condition or segment where a specific financial activity, asset class, or technological innovation operates without clear, established, or comprehensive legal and supervisory oversight. </a><a href="https://prime.greeks.live/area/digital-assets-act/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![Geometric forms with circuit patterns and water droplets symbolize a Principal's Prime RFQ. This visualizes institutional-grade algorithmic trading infrastructure, depicting electronic market microstructure, high-fidelity execution, and real-time price discovery](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-engine-prime-os-microstructure-analytics.jpg)

## Digital Assets Act

Meaning ▴ A Digital Assets Act refers to a comprehensive legislative or regulatory framework specifically designed to govern the issuance, trading, custody, and overall market conduct pertaining to digital assets, including cryptocurrencies, security tokens, and stablecoins. </a><a href="https://prime.greeks.live/area/customer-token-reuse/?utm_source=options.greeks.live&utm_medium=referral&utm_campaign=satellite" class="glossary-item-box">
![A precision engineered system for institutional digital asset derivatives. Intricate components symbolize RFQ protocol execution, enabling high-fidelity price discovery and liquidity aggregation](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocol-execution-precision-4.jpg)

## Customer Token Reuse

Meaning ▴ Customer Token Reuse refers to the systematic process where a customer's previously acquired or held digital assets, or tokens, are re-employed for subsequent transactions, collateralization, or other utility within a platform or ecosystem without requiring a fresh acquisition or conversion. </a>

**Tags:** [Customer Token Reuse](https://options.greeks.live/area/customer-token-reuse/), [Self-Audit System](https://options.greeks.live/area/self-audit-system/), [Rehypothecation Practices](https://options.greeks.live/area/rehypothecation-practices/), [Market Structure Integrity](https://options.greeks.live/area/market-structure-integrity/), [Investor Protection](https://options.greeks.live/area/investor-protection/), [Institutional Risk](https://options.greeks.live/area/institutional-risk/)	

## Discover More

- 
### [Mastering Crypto Trade Execution for Superior Returns](https://options.greeks.live/guide/mastering-crypto-trade-execution-for-superior-returns/)
![A sleek, high-fidelity beige device with reflective black elements and a control point, set against a dynamic green-to-blue gradient sphere. This abstract representation symbolizes institutional-grade RFQ protocols for digital asset derivatives, ensuring high-fidelity execution and price discovery within market microstructure, powered by an intelligence layer for alpha generation and capital efficiency.](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-institutional-digital-asset-derivatives-rfq-execution-terminal-system.jpg)

Command superior crypto returns with institutional execution strategies, turning market volatility into quantifiable edge.

- 
### [How Does an Institution’s Risk Aversion Parameter Influence Its Hedging Strategy?](https://options.greeks.live/question/how-does-an-institutions-risk-aversion-parameter-influence-its-hedging-strategy/)
![Abstract forms on dark, a sphere balanced by intersecting planes. This signifies high-fidelity execution for institutional digital asset derivatives, embodying RFQ protocols and price discovery within a Prime RFQ. It represents market microstructure, managing latent liquidity and counterparty risk for block trades.](https://options.greeks.live/wp-content/uploads/2025/07/digital-asset-derivatives-rfq-platform-microstructure-execution-prime-os.jpg)

An institution's risk aversion parameter dictates its hedging strategy by defining the precise trade-off between risk mitigation and profit potential.

- 
### [What Are the Primary Differences between MiFID II and PRIIPs Methodologies for Cost Calculation?](https://options.greeks.live/question/what-are-the-primary-differences-between-mifid-ii-and-priips-methodologies-for-cost-calculation/)
![A dynamically balanced stack of multiple, distinct digital devices, signifying layered RFQ protocols and diverse liquidity pools. Each unit represents a unique private quotation within an aggregated inquiry system, facilitating price discovery and high-fidelity execution for institutional-grade digital asset derivatives via an advanced Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/dynamic-rfq-protocol-stacks-powering-institutional-digital-asset-derivatives-liquidity-aggregation-and-best-execution.jpg)

MiFID II and PRIIPs differ in that PRIIPs mandates a specific cost calculation formula for products, whereas MiFID II requires a broader, principles-based cost aggregation for services.

- 
### [What Was the Role of National Competent Authorities in Making the EU’s Binary Options Ban Permanent?](https://options.greeks.live/question/what-was-the-role-of-national-competent-authorities-in-making-the-eus-binary-options-ban-permanent/)
![A luminous digital market microstructure diagram depicts intersecting high-fidelity execution paths over a transparent liquidity pool. A central RFQ engine processes aggregated inquiries for institutional digital asset derivatives, optimizing price discovery and capital efficiency within a Prime RFQ.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-digital-asset-derivatives-rfq-protocols-high-fidelity-execution-principal-operational-framework-price-discovery.jpg)

NCAs used their national powers under MiFIR Article 42 to convert ESMA's temporary EU-wide shield into a permanent, local prohibition.

- 
### [Why Have Many Regulators Banned the Sale of Binary Options to Retail Investors?](https://options.greeks.live/question/why-have-many-regulators-banned-the-sale-of-binary-options-to-retail-investors/)
![A sleek, institutional-grade device featuring a reflective blue dome, representing a Crypto Derivatives OS Intelligence Layer for RFQ and Price Discovery. Its metallic arm, symbolizing Pre-Trade Analytics and Latency monitoring, ensures High-Fidelity Execution for Multi-Leg Spreads.](https://options.greeks.live/wp-content/uploads/2025/08/institutional-digital-asset-derivatives-rfq-execution-intelligence-layer.jpg)

Regulators banned binary options for retail investors due to their inherent structural design, which creates a non-transparent, negative-sum wagering environment.

- 
### [What Was the Stated Rationale for Banning Binary Options Completely While Only Restricting CFDs?](https://options.greeks.live/question/what-was-the-stated-rationale-for-banning-binary-options-completely-while-only-restricting-cfds/)
![A precision metallic instrument with a black sphere rests on a multi-layered platform. This symbolizes institutional digital asset derivatives market microstructure, enabling high-fidelity execution and optimal price discovery across diverse liquidity pools. Essential for managing counterparty risk and multi-leg spread strategies within the Prime RFQ protocol intelligence layer.](https://options.greeks.live/wp-content/uploads/2025/07/prime-os-rfq-protocol-engine-component-digital-asset-derivatives-market-microstructure.jpg)

Binary options were banned for irreparable structural flaws, while CFDs were restricted to mitigate manageable leverage-driven risks.

- 
### [SEC and Gemini Reach Agreement on Crypto Lending Dispute](https://options.greeks.live/news/sec-and-gemini-reach-agreement-on-crypto-lending-dispute/)
![A central, multifaceted RFQ engine processes aggregated inquiries via precise execution pathways and robust capital conduits. This institutional-grade system optimizes liquidity aggregation, enabling high-fidelity execution and atomic settlement for digital asset derivatives.](https://options.greeks.live/wp-content/uploads/2025/07/institutional-rfq-protocol-engine-high-fidelity-digital-asset-execution.jpg)

This regulatory resolution provides a clearer operational framework for digital asset lending, enhancing systemic integrity and investor confidence.

- 
### [How Can an Institution Effectively Quantify Smart Contract Risk?](https://options.greeks.live/question/how-can-an-institution-effectively-quantify-smart-contract-risk/)
![A sleek, spherical white and blue module featuring a central black aperture and teal lens, representing the core Intelligence Layer for Institutional Trading in Digital Asset Derivatives. It visualizes High-Fidelity Execution within an RFQ protocol, enabling precise Price Discovery and optimizing the Principal's Operational Framework for Crypto Derivatives OS.](https://options.greeks.live/wp-content/uploads/2025/07/precision-lens-for-institutional-digital-asset-derivatives-rfq-execution.jpg)

Quantifying smart contract risk is the systematic translation of code logic and economic incentives into a probabilistic loss distribution.

- 
### [How Does the European Union’s Mica Regulation Promote Institutional Investment in Crypto Assets?](https://options.greeks.live/question/how-does-the-european-unions-mica-regulation-promote-institutional-investment-in-crypto-assets/)
![A transparent glass sphere rests precisely on a metallic rod, connecting a grey structural element and a dark teal engineered module with a clear lens. This symbolizes atomic settlement of digital asset derivatives via private quotation within a Prime RFQ, showcasing high-fidelity execution and capital efficiency for RFQ protocols and liquidity aggregation.](https://options.greeks.live/wp-content/uploads/2025/07/architecting-high-fidelity-execution-for-institutional-digital-asset-derivatives-rfq-protocols-and-systemic-liquidity-aggregation.jpg)

MiCA provides a clear regulatory framework for crypto-assets, enhancing investor protection and market integrity to attract institutional investment.

---

## Raw Schema Data

```json
{
    "@context": "https://schema.org",
    "@type": "BreadcrumbList",
    "itemListElement": [
        {
            "@type": "ListItem",
            "position": 1,
            "name": "Home",
            "item": "https://options.greeks.live"
        },
        {
            "@type": "ListItem",
            "position": 2,
            "name": "News",
            "item": "https://options.greeks.live/news/"
        },
        {
            "@type": "ListItem",
            "position": 3,
            "name": "India Uncovers Crypto Exchange Practices Mirroring FTX Vulnerabilities",
            "item": "https://options.greeks.live/news/india-uncovers-crypto-exchange-practices-mirroring-ftx-vulnerabilities/"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Organization",
    "@id": "https://greeks.live/#organization",
    "name": "Greeks.Live",
    "url": "https://greeks.live/",
    "description": "Greeks.live is the definitive toolkit for the professional options trader, dedicated to empowering our users with institutional-grade data, advanced analytics, and a comprehensive suite of trading tools designed to provide a decisive edge in the market. Every article and guide published under the Greeks.live name is a product of our deep commitment to data-driven analysis and our mission to support the global trading community.",
    "email": "support@greeks.live",
    "logo": {
        "@type": "ImageObject",
        "url": "https://options.greeks.live/wp-content/uploads/2025/07/Greeks.Live-Logo-Icon.svg"
    },
    "hasPart": [
        {
            "@type": "WebSite",
            "name": "About Us",
            "url": "https://about.greeks.live"
        },
        {
            "@type": "WebSite",
            "name": "App Download Page",
            "url": "https://about.greeks.live/#/download/basic_trade"
        },
        {
            "@type": "WebSite",
            "name": "Newcomers' Guide",
            "url": "https://twisty-sign-c8b.notion.site/Guide-for-Greeks-live-X-Deribit-Newbies-5a08a3052822427d800af6eaf3704c8d"
        },
        {
            "@type": "WebSite",
            "name": "Knowledge Base",
            "url": "https://linktr.ee/greeks.live"
        },
        {
            "@type": "WebSite",
            "name": "Option Terminology",
            "url": "https://greekslive.notion.site/88dfc00e7c584d4d8969b6302a79a12f?pvs=4"
        },
        {
            "@type": "WebSite",
            "name": "Terms of Service",
            "url": "https://greeks.live/#/tos"
        },
        {
            "@type": "WebSite",
            "name": "Disclaimer",
            "url": "https://greeks.live/#/disclaimer"
        }
    ],
    "sameAs": [
        "https://x.com/greekslive",
        "https://youtube.com/@greeks_live?si=-KjT0Lkw4WUCI0tD",
        "https://t.me/greekslive_notifications",
        "https://t.me/greekslive",
        "https://pinterest.com/greekslive/"
    ],
    "makesOffer": [
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "RFQ Platform",
                "url": "https://rfq.greeks.live",
                "description": "Execute institutional-grade block trades for crypto options and futures. This platform provides deep, over-the-counter (OTC) liquidity via a professional Request for Quote system.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Lending Tools",
                "url": "https://lend.greeks.live",
                "description": "Manage crypto lending and borrowing activities to earn yield or secure loans. This suite of tools helps users analyze interest rates and manage collateralized debt positions.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Data Lab",
                "url": "https://greeks.live/#/deribit/tools/datalab/BTC",
                "description": "Analyze historical and real-time options data with advanced metrics. This tool is designed for backtesting strategies and identifying market trends through comprehensive data visualization.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Profit & Loss Analysis (PnL)",
                "url": "https://greeks.live/#/deribit/tools/pnl_analysis",
                "description": "Track and analyze the Profit and Loss (PnL) of your options portfolio. This tool provides detailed performance metrics to help traders evaluate and refine their strategies.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Position Visualization",
                "url": "https://greeks.live/#/deribit/tools/pv/BTC",
                "description": "Visualize complex options positions and their corresponding risk profiles. This tool generates payoff diagrams to help traders intuitively understand potential profit, loss, and exposure.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Options Calculator",
                "url": "https://greeks.live/#/deribit/tools/calculator",
                "description": "Calculate the theoretical price and risk parameters ('the Greeks') of crypto options. An essential tool for pricing new trades and analyzing the sensitivity of existing positions.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live Main Platform",
                "url": "https://greeks.live/",
                "description": "The central hub for the Greeks.live suite of professional cryptocurrency options and derivatives trading tools. Access analytics, manage positions, and explore the ecosystem.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Community Forum",
                "url": "https://t.greeks.live",
                "description": "Join the official Greeks.live community. Connect with other traders, share insights, and receive the latest updates directly from the team.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live for Deribit",
                "url": "http://deribit.greeks.live",
                "description": "A dedicated interface for trading on the Deribit exchange. This platform leverages Greeks.live's advanced analytics and tools specifically for users of Deribit's options and futures markets.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "Greeks.live for OKX",
                "url": "http://okx.greeks.live",
                "description": "A dedicated interface for trading on the OKX exchange. This platform integrates Greeks.live's powerful analytics with the OKX marketplace, focusing on its options and derivatives products.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "GLVS.AI Trading Platform",
                "url": "https://www.glvs.ai/",
                "description": "An AI-powered platform for automated crypto options trading. Leverage advanced algorithms and data-driven signals to develop and deploy sophisticated, hands-free trading strategies.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        },
        {
            "@type": "Offer",
            "itemOffered": {
                "@type": "Service",
                "name": "API Testnet & Sandbox",
                "url": "https://test.greeks.live",
                "description": "A dedicated testnet environment for developers to test their API integrations and automated trading strategies. This sandbox allows for full functionality testing without risking real funds.",
                "provider": {
                    "@id": "https://greeks.live/#organization"
                }
            }
        }
    ],
    "subOrganization": [
        {
            "@type": "Organization",
            "name": "GreeksLive HK Co., Limited",
            "email": "support@greeks.live",
            "telephone": "+852-56418949",
            "address": {
                "@type": "PostalAddress",
                "streetAddress": "Unit 11, 27/F, K. Wah Centre, 191 Java Road",
                "addressLocality": "Hong Kong",
                "addressRegion": "North Point",
                "addressCountry": "CN",
                "postalCode": "0000"
            },
            "geo": {
                "@type": "GeoCoordinates",
                "latitude": "22.2932357",
                "longitude": "114.2022026"
            },
            "image": "https://options.greeks.live/wp-content/uploads/2025/08/Wah-Centre-Hong-Kong.jpg"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Article",
    "mainEntityOfPage": {
        "@type": "WebPage",
        "@id": "https://options.greeks.live/news/india-uncovers-crypto-exchange-practices-mirroring-ftx-vulnerabilities/"
    },
    "headline": "India Uncovers Crypto Exchange Practices Mirroring FTX Vulnerabilities \u25b4 News",
    "description": "This analysis dissects systemic risks within India's crypto exchange landscape, highlighting the urgent need for robust regulatory frameworks to secure digital asset integrity and protect retail investors. \u25b4 News",
    "url": "https://options.greeks.live/news/india-uncovers-crypto-exchange-practices-mirroring-ftx-vulnerabilities/",
    "datePublished": "2025-09-07T14:53:52+00:00",
    "dateModified": "2025-09-11T01:37:40+00:00",
    "articleSection": [
        "News"
    ],
    "author": {
        "@id": "https://greeks.live/#organization"
    },
    "publisher": {
        "@id": "https://greeks.live/#organization"
    },
    "image": {
        "@type": "ImageObject",
        "url": "https://options.greeks.live/wp-content/uploads/2025/07/high-fidelity-rfq-for-institutional-digital-asset-derivatives-primeos.jpg",
        "caption": "Abstract geometric forms, with a central cross-shaped structure intersecting layered blue ellipses against a smooth dome, represent a Principal's operational framework. This embodies robust market microstructure for institutional digital asset derivatives, highlighting RFQ protocol efficiency, dark liquidity aggregation, and multi-leg spread execution. It ensures best execution, minimal slippage, supporting advanced quantitative analysis for alpha generation on volatility surfaces."
    },
    "keywords": [
        "Centralized Exchanges",
        "Customer Token Reuse",
        "Digital Assets Act",
        "Institutional Risk",
        "Investor Protection",
        "Liquidity Commingling",
        "Market Structure Integrity",
        "Regulatory Vacuum",
        "Rehypothecation Practices",
        "Self-Audit System"
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "WebSite",
    "url": "https://options.greeks.live/",
    "potentialAction": {
        "@type": "SearchAction",
        "target": "https://options.greeks.live/?s=search_term_string",
        "query-input": "required name=search_term_string"
    }
}
```


---

**Original URL:** https://options.greeks.live/news/india-uncovers-crypto-exchange-practices-mirroring-ftx-vulnerabilities/
