- India’s Financial Intelligence Unit (FIU) has launched a probe into crypto-based terror financing
- The investigation is focused on suspicious cross-border transactions involving Pakistan and the Kashmir region
- Major exchanges like Binance are being scrutinized for their role in facilitating transfers to private wallets
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 Investigation’s Focus: Binance and Unregulated Wallets
The probe is specifically targeting the role of leading cryptocurrency exchanges in these fund flows.
Now, the wallets under probe operate outside the oversight of licensed exchanges, making them ideal for illicit transactions.
WazirX Fights Separate Legal Battle in Singapore
While the Indian FIU’s probe unfolds, the Indian-founded crypto exchange WazirX is facing its own, entirely separate legal battle in a Singaporean court.
That case, which has a crucial hearing scheduled for July 15, centers on a dispute with users over the ownership of crypto assets on its platform and does not appear to be related to the Indian terror financing investigation.
Crypto Transfers Linked to Extremist Activity
The FIU’s investigation in India is reportedly probing wallet addresses that are allegedly linked to Syria-based entities and were funded with TRX tokens originating from India.
These revelations stem from a 72-page affidavit that has triggered additional compliance reviews for platforms operating in the region.
Recent raids in Jammu & Kashmir also uncovered evidence 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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