India has uncovered nearly 12,000 suspicious cryptocurrency transactions over an eight-month span, highlighting a significant rise in fraudulent activities associated with digital assets. This surge is predominantly linked to younger users, with over 80% of the flagged cases involving individuals aged between 20 and 40 years old.
According to governmental disclosures, the involvement of Tether (USDT) in these fraudulent transactions is particularly alarming, as it appears in 76% of all flagged cases. The increase in suspicious cryptocurrency activities has been steep when compared to previous years, where only about 1,300 cases were recorded during the entirety of 2023 and 2024.
As of late November 2025, India boasts around 34 million cryptocurrency users, holding digital assets valued at approximately ₹24,800 crore. A large portion of this trading occurs on international platforms, complicating regulatory oversight and enforcement efforts.
Authorities have expressed significant concerns regarding the association of cryptocurrency use with illicit activities such as tax evasion, money laundering, and funding of unlawful enterprises. In response to these challenges, lawmakers amended the Prevention of Money Laundering Act in March 2023, mandating that all cryptocurrency exchanges operating in India must register with the Financial Intelligence Unit, regardless of their geographical location.
To date, 52 companies have successfully registered. These registered firms are obligated to report transactions that appear suspicious or are associated with unclear fund origins. Common red flags identified by investigators include dormant accounts becoming active again, frequent transfers just under reporting thresholds, and suspected fabricated trades designed to produce paper losses.
The fiscal year 2024 saw companies filing 1,343 alerts regarding suspicious activities. This number escalated dramatically to 6,272 submissions in fiscal year 2025, culminating in 11,720 alerts by November 30 of the current year. Investigators scrutinized 9,795 reports from May 2023 to May 2025. The data revealed that straightforward scams constitute 62% of the reports, while complex or irregular transaction structures account for 16%, and abnormal account behavior represents 10%.
Regionally, Rajasthan leads in reported suspicious transactions with 18%, closely followed by Uttar Pradesh at 11%. Maharashtra and West Bengal each report 7%, with Madhya Pradesh right behind. A parliamentary finance committee, headed by BJP member Bhartruhari Mahtab, is currently reviewing the cryptocurrency sector.
In addition to the rising number of suspicious activities, regulators have imposed penalties totaling ₹29 crore and blocked 63 websites for violations related to digital asset operations under the Information Technology Act.
Moreover, authorities have traced 34 users” accounts back to Cambodia, with access facilitated through Cambodian phone numbers. Funds were routed using Huione Pay, raising alarms about connections to online crime and human trafficking networks. Transaction records indicate a pattern of repeated funding with USDT, rapid liquidation, and instant withdrawals into Indian bank accounts, further complicating tracking efforts.
The United States has responded to similar concerns by barring Huione Group from accessing its dollar system, effectively cutting off its financial channels. As cryptocurrency usage expands, Indian officials face increasing difficulties with tax enforcement, as cross-border crypto transfers often evade reporting requirements, particularly when users utilize private wallets and offshore exchanges.
