TL;DR
- India flagged nearly 12,000 suspicious crypto transactions in eight months.
- Over 80% of cases involved users between 20 and 40 years old.
- Tether (USDT) was involved in 76% of all flagged fraud cases.
India records a sharp rise in suspicious cryptocurrency activity, according to recent government disclosures. Official data shows nearly 12,000 flagged transactions within an eight-month period, a steep jump from just over 1,300 cases recorded across 2023 and 2024. The figures point to faster adoption of digital assets alongside growing misuse, particularly among younger users.
Authorities report that individuals between 20 and 40 years old account for more than four out of five flagged cases. India counts around 34 million crypto users, holding digital assets valued at roughly ₹24,800 crore as of late November 2025. A large share of trading occurs on platforms located outside national borders, which complicates oversight and enforcement.
Government agencies continue to view digital currencies with caution
Officials link crypto use to tax avoidance, illicit funding, and money laundering. In response, lawmakers amended the Prevention of Money Laundering Act during March 2023 to bring crypto exchanges under formal supervision. Under current rules, any firm enabling Indians to buy, sell, or store digital assets must register with the Financial Intelligence Unit, regardless of corporate location.
So far, 52 companies have completed registration. Registered firms must report transactions tied to suspected crime funds, unclear cash origins, or unusual trading patterns. Common red flags include dormant accounts that suddenly activate, repeated transfers just below reporting thresholds, fabricated trades to generate paper losses, and unexplained inflows.
Stablecoins dominate fraud reports
Companies filed 1,343 alerts during fiscal year 2024. Submissions climbed to 6,272 during fiscal 2025 and reached 11,720 by November 30 of the current year. Investigators reviewed 9,795 reports between May 2023 and May 2025. Tether (USDT) appears in 76% of cases, while Bitcoin features in about 6%, highlighting stablecoin use in questionable activity.
Straightforward scams account for 62% of reports. Complex or irregular transaction structures make up 16%, while abnormal account behavior represents 10%. Regional data shows Rajasthan leading with 18% of reports, followed by Uttar Pradesh at 11%. Maharashtra and West Bengal each post 7%, with Madhya Pradesh close behind.
A parliamentary finance committee led by BJP member Bhartruhari Mahtab reviews the crypto sector. Regulators impose ₹29 crore in penalties and block 63 websites under the Information Technology Act for violations tied to digital asset activity.
Authorities identify 34 users whose accounts trace back to Cambodia
Access occurred through Cambodian phone numbers, with funds routed via Huione Pay. Investigators link the flows to online crime and human trafficking networks. Transaction records show repeated funding with USDT, rapid liquidation, and immediate withdrawal into Indian bank accounts. Blockchain tracking tools connect the digital funds to Huione Pay, with multiple users sharing devices and network addresses.
The United States later bars Huione Group from the dollar system, cutting access to American financial channels. Indian officials now face an additional challenge: tax enforcement. Crypto transfers across borders often bypass reporting bodies, especially when users rely on private wallets and offshore exchanges. As usage spreads, taxable income becomes harder to trace, leaving large portions of crypto-related revenue outside official records.
