India’s Financial Intelligence Unit (FIU) has launched an in-depth investigation into cryptocurrency fund movements linked to cross-border activities. The focus is on suspicious transactions involving Pakistan-based sources, particularly in the volatile Jammu & Kashmir region. Authorities are increasingly alarmed that decentralized finance tools may be used to channel funds to extremist groups, potentially undermining national security.
The probe specifically targets leading cryptocurrency exchanges Binance and WazirX. These platforms are suspected of facilitating transfers to unregulated private wallets.
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These wallets operate outside the oversight of licensed exchanges, making them ideal for illicit transactions. FIU is working closely with multiple domestic and international exchanges to trace digital fund flows that may be supporting terror-linked operations.
Binance and WazirX in the Spotlight
The investigation comes months after Binance resumed full operations in India by settling a $2.25 million penalty. The penalty was issued in 2023 for violating anti-money laundering (AML) norms.
Since regaining compliance, Binance has cooperated with Indian authorities on several fronts. The exchange had previously assisted in probes that led to key arrests in financial crime cases.
WazirX, on the other hand, is under intense scrutiny for a rise in cross-border transfers. FIU flagged growing activity along the India-Pakistan border, prompting a deeper dive into the platform’s transaction history.
Related: India Issues Crypto Tax Notices to Thousands, Seizes $327K in Crackdown
Compounding its legal troubles, WazirX faces a crucial hearing in Singapore on July 15. The case questions user ownership of crypto assets on its platform, raising concerns over platform accountability.
Crypto Transfers Linked to Extremist Activity
Significantly, investigators are probing wallet addresses allegedly linked to Syria-based entities. Authorities believe these were funded through TRX tokens originating from India. Some transactions reportedly had ties to global extremist networks. These revelations stem from a 72-page affidavit that triggered additional compliance reviews for the platform.
Recent raids in Jammu & Kashmir uncovered further evidence. Officials found that Bitcoin had been used by handlers in Pakistan to fund militant activities. This development highlights how cryptocurrencies, despite their legitimate uses, are also being exploited for unlawful purposes.
India and Pakistan’s Diverging Crypto Landscapes
India’s government is reviewing its crypto framework to align with international standards. Meanwhile, the Reserve Bank remains cautious, warning about systemic risks. Despite this, India’s crypto trading volume touched $1.9 billion in late 2024, reflecting rapid adoption.
Pakistan, with an estimated 15–20 million crypto users, ranks among the top global adopters. It established the Pakistan Crypto Council and PVARA this year to regulate the sector.
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