Reports of fraudulent and suspicious cryptocurrency transactions in India have grown at a rapid pace over the last three years, pointing to a sharp rise in cybercrime linked activity. Government data shows that such reports jumped from 1343 cases in the 2023 to 24 financial year to 11720 in just the first eight months of the current fiscal. This marks a rise of 773 percent. Around 82 percent of the cases involve Indians aged between 20 and 40.
This surge comes even as the Indian crypto market continues to expand. As of November 30 2025, India had about 34 million users of virtual digital assets holding investments worth 24800 crore rupees. Nearly 41 percent of these users trade through offshore platforms that remain outside the direct reach of Indian regulators.
The government has long expressed concern about cryptocurrencies due to risks linked to money laundering terror financing and tax evasion. In March 2023 crypto related services were brought under the Prevention of Money Laundering Act. Under this law any virtual digital asset service provider that serves Indian users must register with the Financial Intelligence Unit and report suspicious activity.
So far 52 service providers have registered. These platforms must submit suspicious transaction reports when they spot unusual behaviour. This includes dormant accounts becoming active suddenly transactions kept just below reporting limits circular trading and cases where the source of funds cannot be verified.
The number of such reports has risen quickly. Providers filed 1343 reports in fiscal 2024. This rose to 6272 in fiscal 2025 and touched 11720 by November 30 in the current year.
An analysis of 9795 reports filed between May 2023 and May 2025 showed that the stablecoin Tether appeared in 76 percent of cases. Bitcoin featured in 6 percent. Fraud made up 62 percent of the suspicious activity followed by unusual or complex transactions at 16 percent and unusual account behaviour at 10 percent.
Rajasthan recorded the highest share of reports at 18 percent followed by Uttar Pradesh at 11 percent. Maharashtra and West Bengal each accounted for 7 percent while Madhya Pradesh made up 6 percent.
One case flagged by authorities revealed links to Cambodia. Investigators found 34 users accessing Indian crypto accounts using Cambodian phone numbers and payment services. The report noted “These individuals exhibited consistent behaviour of funding their accounts with USDT immediately liquidating it and withdrawing the amount in rupees.” The funds were suspected to be linked to cybercrime and human trafficking.
Authorities have imposed penalties worth 29 crore rupees and blocked 63 websites for non compliance.
Beyond crime risks cryptocurrencies also pose a major challenge for tax collection due to anonymous transfers offshore platforms and private wallets that make income hard to trace.
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