India’s Financial Intelligence Unit (FIU-IND) and the Enforcement Directorate (ED) are investigating global cryptocurrency exchanges Binance and WazirX over concerns about unregulated cross-border transactions that could facilitate illegal funding, money laundering, or terrorism financing. The probe centers on suspicious wallet-to-wallet transfers involving accounts linked to Pakistan, particularly in sensitive regions like Jammu and Kashmir.
Why is India investigating Binance and WazirX?
The investigation focuses on crypto transfers that bypass standard reporting requirements. Authorities have flagged the risk of such activities supporting separatist or extremist networks, given the region’s history of illicit financial flows. Key concerns include:
- Transactions conducted through private addresses not tied to regulated exchanges
- Lack of transparency in cross-border transfers
- Potential links to terrorism financing
What are the national security implications of these crypto transfers?
The investigation intensified after officials noted a surge in crypto activity between Pakistani accounts and recipients in border areas. This has raised national security concerns because:
- Cross-border transactions are harder to trace
- Private wallets lack oversight
- The region has a history of illicit financial flows
How have Binance and WazirX responded to the probe?
Binance, the largest crypto exchange globally, returned to India in 2024 after resolving compliance issues. However:
- It paid a $189 million fine for past violations
- The ED has frozen some of its bank accounts
- WazirX suffered a $235 million hack by the Lazarus Group
What are India’s cryptocurrency regulations?
India’s regulatory approach has evolved significantly:
| Year | Regulation |
|---|---|
| 2018 | Supreme Court overturned crypto ban |
| 2024 | Exchanges must register with FIU-IND |
| 2025 | Budget tightened disclosure requirements |
How does Pakistan’s approach differ from India’s?
Pakistan has taken a contrasting path by:
- Legalizing crypto trading
- Establishing the Pakistan Virtual Assets Regulatory Authority (PVARA)
- Aiming to attract foreign investment
What are the global implications of this investigation?
The probe aligns with worldwide efforts to tighten crypto oversight:
- U.S. disrupted terrorist financing operations
- EU’s AMLA enforces region-wide licensing
- Global focus on balancing innovation with security
Frequently Asked Questions
What triggered the investigation into Binance and WazirX?
The investigation began after authorities noticed suspicious wallet-to-wallet transfers involving accounts linked to Pakistan, particularly in sensitive regions like Jammu and Kashmir.
Has Binance faced regulatory issues in India before?
Yes, Binance paid a $189 million fine for past violations before returning to India in 2024.
What are the main concerns about these crypto transfers?
The primary concerns are potential money laundering, terrorism financing, and the lack of transparency in cross-border transactions.
How does India regulate cryptocurrency exchanges?
Exchanges must register with FIU-IND, adhere to AML rules, implement KYC checks, and comply with tax regulations including a 30% tax on profits.
What makes cross-border crypto transactions risky?
They are harder to trace, often bypass reporting requirements, and can be exploited for illegal purposes due to differing regulations between countries.
How has Pakistan responded to cryptocurrency regulation?
Pakistan legalized crypto trading and established PVARA in July 2025 to license and oversee virtual asset services.
