The eruption of Cryptocurrency is threatening to disrupt the global financial space. Crypto speed has become a shield for crime. And India is now feeling the shock. Ordinary investors continue to pour their savings into digital tokens. Yet, government agencies are often stumped. All while criminal networks exploit these very platforms with ruthless ease.
A national daily has brought to the fore an analysis by the Home Ministry’s Indian Cyber Crime Coordination Centre (I4C). It has revealed at least 144 cases and uncovered a persistent trail showing how cryptocurrency is routinely used to channel stolen funds from cyber crimes.
The daily has highlighted that in just 21 months, from January 2024 to September 2025, the I4C flagged 27 crypto exchanges allegedly serving as laundering pipelines for cyber-criminals.
An estimated Rs 623.63 crore, siphoned from around 2,872 victims, moved through these platforms, with individual exchanges seeing amounts ranging from Rs 360.16 crore to Rs 6.01 crore, the report added.
The global regulatory landscape isn’t sound either. Oversight is common. Some jurisdictions impose stringent licensing. Others operate with lax supervision.
This fractured environment mirrors the same loopholes once exploited in traditional offshore finance. Ransomware operations, drug cartels, cyber-fraud syndicates and sanction evaders have gravitated toward crypto precisely because funds can jump between wallets, exchanges and “mixers” in minutes, often disappearing into territories with the weakest rules.
The Coin Laundry investigation has revealed how an unregulated crypto ecosystem has birthed a vast shadow economy.
The news report claims that in nine years, crypto exchanges have amassed at least $5.8 billion in fines, penalties and settlements, exposing the scale and secrecy of this parallel world.
These findings place The Coin Laundry alongside the Panama Papers, Paradise Papers, Pandora Papers and HSBC Leaks, all charting the global routes of illicit money, now accelerated by digital assets built for anonymity and borderless movement.
A cryptocurrency is a digital token that can be bought, sold or transferred without a bank in the middle. Its transactions sit on a blockchain. Users remain hidden behind wallet addresses. The exchanges that trade these tokens function like stock markets without traditional rules, delivering speed and anonymity that draw in both genuine investors and criminals looking for cover.
India’s own regulatory posture remains conflicted. Officials fear that implementing rules may appear to legitimise an asset widely considered volatile and systemically risky.
The Finance Ministry is still only working on a “discussion paper” on cryptocurrencies, a preliminary assessment rather than a decisive policy.
Absence of regulation
Meanwhile, enforcement agencies grapple with basic issues such as storing confiscated digital assets. One premier investigative agency, according to the report, has placed roughly $4mn in seized crypto with a custody and wallet infrastructure firm, while the Enforcement Directorate waits for Home Ministry directions on secure storage.
The absence of regulation leaves Indian investors dangerously exposed. If an exchange collapses or freezes withdrawals, there is no RBI ombudsman, no SEBI protection, and no formal recourse, only uncertainty. Domestic exchanges argue that the policy vacuum cripples their operations, whereas offshore platforms, operating beyond India’s jurisdiction, continue serving Indian users freely.
Taxation is no fix
Taxation adds another layer of strain. The 1% TDS on every transaction and 30% capital gains tax have pushed traders away from local platforms.
Between April 2022 and July 2023, trading volumes on Indian exchanges plunged 97%, with Rs Rs 35,000 crore in transactions shifting to offshore systems.
Major Indian exchanges are structured under foreign holding companies, which founders describe as a standard fintech strategy for raising capital, though they acknowledge that India’s regulatory ambiguity contributes to this “layered existence.”
Worldwide, regulators continue to lag behind. Consumer-protection rules are evolving far too slowly, and enforcement remains uneven.
As India confronts the explosive growth of digital assets, the gap between technological speed and regulatory certainty continues to widen. Unsurprisingly, agencies are strained, investors have become vulnerable and criminals are having a field day.
Also Read: Ahmedabad: ED Seizes Over Rs 1,600 Cr in Cryptocurrency Fraud Investigation https://www.vibesofindia.com/ahmedabad-ed-seizes-over-rs-1600-cr-in-cryptocurrency-fraud-investigation/
