Indian cryptocurrency exchange Mudrex has temporarily suspended crypto withdrawals, igniting frustration among users and sparking heated debate within the crypto community. The platform announced the suspension on January 11, citing the need for compliance upgrades to enhance security and prevent misuse by bad actors. Mudrex assured users the pause is temporary, with withdrawals expected to resume by January 28.

Co-founder and CEO Edul Patel defended the decision, stating, “When dealing with something as critical as crypto, it’s essential to ensure the infrastructure is robust to prevent nefarious activities.” He emphasized that Mudrex remains one of the few exchanges in India offering crypto withdrawal capabilities, a commitment the company has upheld for over three years.

The announcement triggered widespread concern after crypto trader Vivan Live posted a warning on X (formerly Twitter), urging users to withdraw their funds immediately. In his post, he criticized Mudrex’s decision, fueling skepticism from others in the community. One user accused the platform of offering "price exposure, not ownership," further casting doubt on the exchange's transparency.

Despite the backlash, Mudrex reported significant growth, with a 200% annual increase in its user base, reaching three million users. Additionally, December’s trading volume surged 20-fold to $200 million, reflecting the platform's expanding footprint.

The controversy comes as India’s crypto landscape faces mounting regulatory scrutiny. Notably, Bybit, another major exchange, suspended operations in the country on January 12, citing evolving regulations as the cause for halting services like crypto trading and account openings.

Mudrex’s move highlights the challenges crypto platforms face in balancing regulatory compliance and user trust in India’s tightening crypto market.