Escalating Irregularities in Crypto Transactions
Dodgy cryptocurrency transactions in India have increased dramatically, rising from approximately 1,000 last year to nearly 12,000 in recent months, according to official data. The majority of individuals involved in these questionable transactions fall within the age range of 20 to 40.
Government statistics indicate that 1,343 dubious transactions occurred between 2023 and 2024. In the first eight months of the current year, this total surged by 773%, reaching 11,720. Individuals in their twenties and thirties constitute 82% of these reported instances.
Tighter Regulations as Crypto Use Grows
India currently has 34 million people actively trading virtual digital assets, commonly known as cryptocurrencies. As of November 30, 2025, these individuals hold an estimated ₹24,800 crore worth of these assets. A significant portion, around 41%, engage in trading on platforms based outside India, making them more difficult for local regulators to oversee.
Authorities express a lack of trust in digital currency, citing its potential use for tax evasion, financing terrorism, and money laundering. To address these concerns, the Prevention of Money Laundering Act was amended in March 2023 to implement stricter supervision of cryptocurrency exchanges.
The Financial Intelligence Unit now mandates registration for any company facilitating the buying, selling, or storing of cryptocurrencies within India. The company's headquarters, whether in Miami or Mumbai, is immaterial; registration is required if Indian citizens utilize the service for transferring digital currencies or trading cryptocurrencies for rupees.
To date, fifty-two companies have successfully registered. These registered entities are obligated to report any suspicious transactions that suggest criminal proceeds, unusually complex transaction patterns, or trades where the origin of funds cannot be determined. Red flags include dormant accounts suddenly becoming active, transactions strategically kept just below reporting thresholds, fabricated trading to create paper losses, and the appearance of funds from unknown sources.
The number of these reports has seen a substantial increase. Companies submitted 1,343 filings in fiscal year 2024. This figure rose to 6,272 in fiscal year 2025. By November 30 of the current year, the number has already reached 11,720.
Officials conducted a review of 9,795 reports submitted between May 2023 and May 2025. Tether, a cryptocurrency designed to maintain parity with the US dollar, was the most frequently mentioned digital asset, appearing in 7,467 cases, or 76% of the reports. Bitcoin was cited in only 6% of the cases.
Straightforward fraud accounted for 62% of the suspicious activity identified. Unusually complex or irregular transactions made up 16%, while unusual account behavior constituted 10% of the reported issues.
Geographically, Rajasthan reported the highest number of cases at 18%, followed by Uttar Pradesh with 11%. Maharashtra and West Bengal each accounted for 7% of the reports, while Madhya Pradesh contributed 6%.
A finance committee, chaired by BJP member Bhartruhari Mahtab, is currently investigating the cryptocurrency landscape. The government has imposed ₹29 crore in fines on entities found to be in violation of regulations and has blocked 63 websites under Section 69A of the Information Technology Act, 2000.
Cambodia Link Raises Trafficking Concerns
One particular case highlights the gravity of the situation. Investigators identified 34 customers whose internet connections traced back to Cambodia. These individuals were utilizing Cambodian phone numbers to access their Indian crypto accounts and were receiving funds through Huione Pay, a payment company based in Cambodia. Police suspect that the money is linked to cybercrimes and human trafficking activities.
“These individuals exhibited consistent behaviour of funding their accounts with USDT, immediately liquidating it, and withdrawing the corresponding amount in rupees to their bank accounts,” the Financial Intelligence Unit report stated.
Software designed to track crypto movements revealed that the digital coins originated from Huione Pay. Several customers were observed logging in using the same phone or computer and sharing internet addresses.
Huione Pay indicated that it had reached 21 of these customers via WhatsApp. Eight were located in Cambodia, six in Thailand, one in Vietnam, and one in India. Their stated professions included regular jobs in hotels, restaurants, engineering, and supermarkets, which do not typically align with the volume of money being moved.
The United States has taken action to cut off Huione Group from the American financial system, prohibiting them from conducting dollar-denominated trades.
Tax collection presents another significant challenge. By enabling users to bypass traditional financial institutions that commonly report to tax authorities, cryptocurrency facilitates the covert transfer of money across borders in mere seconds.
As more individuals adopt services that lack central authority, utilize private wallets they control, and engage with foreign exchanges, it becomes increasingly difficult to identify taxable revenue. Tax authorities struggle to pinpoint asset owners or recover unpaid taxes, as revenue generated from cryptocurrency transactions is often undocumented.