Étienne Girard
India’s Financial Intelligence Unit (FIU) has opened a sweeping investigation into the use of cryptocurrencies in suspected terror financing, with a particular focus on transactions connected to Pakistan and the sensitive Jammu & Kashmir region.
Officials are increasingly concerned that decentralized finance (DeFi) tools and private crypto wallets are being used to move funds across borders undetected, potentially aiding extremist groups and posing a serious threat to national security.
Binance and Anonymous Wallets at the Center of the Probe
The investigation zeroes in on the role of major exchanges like Binance, suspected of being used to facilitate transfers to unregulated private wallets. These wallets operate beyond the scope of licensed platforms, making them attractive for illicit transactions.
Authorities are particularly troubled by the lack of traceability in such wallets, which circumvent traditional financial oversight and can easily be exploited for terrorist funding networks.
TRX Transfers and Syria Connections Raise Red Flags
According to reports, Indian investigators are examining wallet addresses allegedly linked to entities in Syria, which were funded using TRX tokens traced back to Indian accounts. These findings were detailed in a 72-page affidavit, which has triggered additional compliance reviews across crypto platforms.
Recent law enforcement raids in Jammu & Kashmir also revealed that Bitcoin was used by handlers in Pakistan to finance militant operations, further underscoring the dual-use nature of cryptocurrency technologies.
India vs. Pakistan: Contrasting Approaches to Crypto Regulation
India is in the process of updating its crypto regulatory framework to align with global standards, while the Reserve Bank of India (RBI) continues to express caution about systemic risks.
Despite concerns, the country’s crypto sector remains robust, with $1.9 billion in trading volume recorded in late 2024.
In contrast, Pakistan has embraced crypto adoption more rapidly, with 15 to 20 million estimated users. The nation recently launched both the Pakistan Crypto Council and PVARA to bring regulation to the growing digital asset market.
Conclusion: Crypto’s Role in Geopolitical Tensions
India’s FIU probe sheds light on the growing complexities of crypto in global security. As digital assets become more mainstream, their misuse in terror financing could force governments to adopt stricter compliance standards, particularly around private wallets and cross-border transactions.
