#cryptocrime

A sweeping investigation into India’s cryptocurrency ecosystem has uncovered how digital asset platforms are being used to move stolen funds across borders at unprecedented speed and scale. Between January 2024 and September 2025, the Indian Cyber Crime Coordination Centre (I4C) identified 27 cryptocurrency exchanges that allegedly enabled criminals to route Rs 623.63 crore siphoned from nearly 2,872 cybercrime victims.

The investigation, part of a large international collaborative project examining global crypto-enabled money laundering, traces complex financial trails across dozens of countries — placing what has now been dubbed the “Coin Laundry” scandal among the most significant digital financial probes of recent years.

A Global Web of Hidden Transactions

The Coin Laundry project reveals that cryptocurrency exchanges, operating in fast-evolving regulatory grey zones, have become modern equivalents of offshore havens. Over the past decade, global exchanges have paid more than $15.6 billion in fines, settlements, and penalties, highlighting the scale of illicit activity being funneled through loosely supervised digital platforms.

For India’s segment of the investigation, analysts examined 144 cybercrime cases reported over the last three years, identifying well-defined pathways through which criminals converted stolen money into cryptocurrency and routed it to foreign networks. The amounts linked to each implicated Indian exchange varied widely — from over Rs 360 crore at one platform to just over Rs 6 crore at another.

High-Profile Connections Emerge

Among the more striking discoveries was the case of a Russian crypto suspect linked not only to international cybercrime rings but also to several high-visibility ventures in India. These included an investment event series targeting Indian audiences, a film featuring Oscar-winner Kevin Spacey and Bollywood actor Disha Patani, and even a high-profile birthday celebration in Mumbai for Maye Musk, mother of Elon Musk.

These connections illustrate how illicit financial networks often blend with legitimate business environments, making detection more challenging.

How Crypto Became a Laundering Highway

Cryptocurrencies operate on public blockchains — transparent but pseudonymous. Wallet addresses replace real identities, creating a loophole exploited by scammers, ransomware groups, drug networks, and sanction evaders.

Crypto exchanges function as the on-ramps and off-ramps to this marketplace. When these exchanges lack adequate KYC, AML controls, or cross-border reporting obligations:

Stolen funds can be converted into digital tokens within minutes Transfers can be split across multiple wallets to obscure the trail Assets can move to jurisdictions with weak oversight instantly

This ability to hop across countries at machine speed mirrors the offshore banking tricks exposed in earlier global probes such as the Panama Papers and Paradise Papers, but now supercharged by blockchain technology.

Regulation Lags Behind Adoption in India

Despite India being one of the world’s fastest-growing crypto markets, regulations remain ambiguous. Policymakers face a dilemma:

Setting clear rules may appear to “legitimise” crypto, potentially encouraging greater retail participation Avoiding regulation allows illicit activity to flourish, as the Coin Laundry revelations show

The Finance Ministry is preparing a discussion paper on cryptocurrencies, but it remains an exploratory document rather than a step toward a regulated framework.

Meanwhile, enforcement agencies are facing unique challenges, including how to store seized digital assets. One major agency has temporarily placed nearly $4 million worth of confiscated cryptocurrency with a private custodian offering secure digital wallet services — a stopgap solution in the absence of formal infrastructure.

A Warning for India and the Global Crypto Industry

The Coin Laundry findings serve as a stark reminder that digital assets, while innovative, also create vast new risks when left under-supervised. The investigation underscores:

The urgent need for unified global crypto standards The danger of fragmented oversight India’s rising exposure to cross-border digital financial crime The vulnerability of consumers who fall victim to schemes running on unregulated platforms