Binance and WazirX Under Fire: India Probes Pakistan-Linked Crypto Transfers Amid Money Laundering Fears
India’s Financial Intelligence Unit (FIU-IND) and the Enforcement Directorate (ED) are tightening the noose around global cryptocurrency exchanges Binance and WazirX. The probe focuses on suspicious crypto transfers linked to Pakistan, raising alarms about money laundering and terrorism financing. Here’s what you need to know.
Why is India investigating Binance and WazirX?
The investigation centers on unregulated cross-border transactions involving accounts linked to Pakistan, particularly in sensitive regions like Jammu and Kashmir. Key concerns include:
- Lack of transparency in wallet-to-wallet transfers
- Bypassing standard reporting requirements
- Potential support for separatist or extremist networks
Binance and WazirX: A history of compliance issues
Binance, the world’s largest crypto exchange, returned to India in 2024 after resolving compliance issues. However, the ED has frozen some of its bank accounts linked to Indian operations. WazirX, previously connected to Binance, faces scrutiny after a $235 million hack and allegations of facilitating TRX token transfers tied to ISIS financing.
India’s evolving crypto regulations
Since 2018, India’s regulatory approach has shifted significantly:
| Year | Regulatory Action |
|---|---|
| 2018 | Supreme Court overturns crypto ban |
| 2024 | Exchanges must register with FIU-IND |
| 2025 | Budget tightens disclosure requirements |
The Pakistan connection: A regulatory divergence
While India tightens crypto oversight, Pakistan has taken a contrasting path by legalizing crypto trading and establishing the Pakistan Virtual Assets Regulatory Authority (PVARA). This divergence amplifies risks for cross-border crypto transactions, with experts warning about potential exploitation for terrorism financing.
Global context: Crypto oversight intensifies
India’s actions mirror global efforts to combat crypto-related illicit activities. The U.S. Department of Justice recently disrupted terrorist financing operations involving Hamas and ISIS, while the EU’s AMLA enforces region-wide licensing to combat money laundering.
Conclusion: Balancing innovation and security
India’s probe into Binance and WazirX reflects the delicate balance between fostering crypto innovation and ensuring financial integrity. As regulatory frameworks evolve, cross-border crypto transactions will remain under scrutiny, especially in regions prone to security threats.
FAQs
Q: What triggered India’s investigation into Binance and WazirX?
A: Suspicious wallet-to-wallet transfers involving accounts linked to Pakistan, particularly in sensitive regions like Jammu and Kashmir.
Q: What are the main concerns about these crypto transfers?
A: Potential money laundering, terrorism financing, and support for separatist or extremist networks.
Q: How has Binance responded to the probe?
A: Binance returned to India in 2024 after resolving compliance issues and paid a $189 million fine for past violations.
Q: What regulatory measures has India implemented for cryptocurrencies?
A: Exchanges must register with FIU-IND, adhere to AML rules, implement KYC checks, and comply with a 30% tax on crypto profits.
Q: How does Pakistan’s approach to crypto regulation differ from India’s?
A: Pakistan has legalized crypto trading and established PVARA to license and oversee virtual asset services, aiming to attract foreign investment.
