Crypto Exchanges – New gateways for dirty money to cross borders
Cryptocurrency exchanges work in a space which has very few clear rules. So their fast-changing technology has created a new route for illegal money to move across borders, the investigation has revealed. Indian authorities are now struggling to keep up with the scale and speed of these activities.
In the past nine years, global exchanges have had to pay more than $15.6 billion in fines, penalties, and settlements. The size of these actions shows how big and hidden this alternative financial world has become, a world that earlier belonged mainly to offshore tax havens.
How India is involved – 27 crypto exchanges allegedly helped criminals move stolen money
IE in its India leg of investigation uncovered troubling details about how crypto is being misused. Between January 2024 and September 2025, the Home Ministry’s Indian Cyber Crime Coordination Centre (I4C) identified at least 27 cryptocurrency exchanges that were allegedly helping criminals move stolen money. Around Rs 623.63 crore taken from nearly 2,872 victims is believed to have passed through these platforms. The amounts linked to each exchange vary widely from over Rs Rs 360 crore at one platform to just over Rs 6 crore at another.
Russian crypto suspect involved in film featuring Kevin Spacey, Disha Patani
One of the cases which stood out was of a Russian crypto suspect who was involved in a film featuring Oscar-winner Kevin Spacey and Bollywood actor Disha Patani, multiple investor events aimed at Indians; and even a birthday celebration in Mumbai for Maye Musk, the mother of Elon Musk.
The scale and complexity of these money trails place The Coin Laundry project in the same league as earlier global investigations coordinated by the ICIJ, including the HSBC Leaks, Panama Papers, Paradise Papers, and Pandora Papers. Like those probes, this investigation exposes how dirty money now travels through digital assets that offer anonymity and easily cross borders.
What is the global risk?
A cryptocurrency is a digital form of money that people can buy, sell, or send without using a bank. All transactions are logged on a blockchain, a public record that is hard to tamper with, but the identities behind those transactions can stay hidden through wallet addresses.
A cryptocurrency exchange is the marketplace where these tokens are traded. It works somewhat like a stock exchange, but the rules are lighter, trades happen faster, and users often have more anonymity. When these platforms operate without strong checks, the same qualities that attract regular investors also draw scammers and money launderers.
Regulation across the world is uneven. Some places like Japan, Singapore and the European Union have strict rules and licensing. Others have far more relaxed systems. This uneven global framework has created gaps that criminals can exploit, similar to what earlier ICIJ investigations exposed in offshore banking.
Criminal groups involved in ransomware, drugs, online fraud and sanctions evasion increasingly use crypto because it is fast and can hide their tracks. Money can move through several wallets, exchanges and mixing services within minutes, often disappearing into regions with weak oversight. India’s situation reflects this global pattern.
Meet Zhimin Qian – Chinese woman who scammed over 100,000 investors in largest UK crypto fraud
A regulatory vacuum exists in India
Even though more and more people in India are investing in crypto, the government is still careful about how it should be regulated. The IE report, citing officials, says that they face a tricky situation. If they set rules for crypto, it might look like they are approving it, which could encourage even more people to put their money into an asset that is highly volatile and could pose risks to the financial system.
Right now, the Finance Ministry is preparing a discussion paper on cryptocurrencies. This is only an early-stage document meant to explore ideas, not a final policy plan.
Meanwhile, investigative agencies are dealing with an unusual problem, where to keep digital coins they seize during probes. The Indian Express has learned that one top agency has temporarily stored nearly $4 million worth of seized cryptocurrency with a private firm that provides secure custody and wallet services.
# Coin Laundry Scandal Explodes: 27 Indian Crypto Exchanges Siphoned Off Rs 623 Crore – A Wake-Up Call for Digital Investors
November 17, 2025**
In the shadowy underbelly of the digital gold rush, where blockchain promises freedom and fortune, a massive laundering scheme has just burst into the open. Dubbed the "Coin Laundry" scandal by investigative journalists, it reveals how 27 Indian cryptocurrency exchanges allegedly funneled a staggering Rs 623 crore from unsuspecting victims into the hands of transnational cybercriminals. This isn't just a glitch in the matrix—it's a full-blown explosion that exposes the vulnerabilities in India's booming crypto scene. As the Home Ministry's Indian Cyber Crime Coordination Centre (I4C) pulls back the curtain, let's dive into the details of this explosive revelation and what it means for everyday investors.
## The Coin Laundry: From Tax Havens to Crypto Hideouts
Remember the Panama Papers? That global exposé on offshore tax dodges? Fast-forward to today, and dirty money has upgraded its toolkit. The International Consortium of Investigative Journalists (ICIJ) has unleashed "The Coin Laundry," a 10-month probe by 113 reporters across 38 newsrooms, uncovering how cryptocurrencies have become the new playground for launderers.
Globally, crypto exchanges have racked up at least $5.8 billion in fines, penalties, and settlements over the past nine years for enabling illicit flows. Ransomware hackers, drug cartels, cyber-fraud rings, and even sanction-dodgers love crypto for its speed, anonymity, and borderless vibe. Funds zip through wallets, mixers, and exchanges like ghosts in the machine, leaving regulators scrambling.
But here's where it hits home: In India, this shadow economy isn't abstract. Between January 2024 and September 2025, I4C tracked 144 cybercrime cases where stolen funds were washed through local crypto platforms. The tally? A jaw-dropping Rs 623.63 crore pilfered from 2,872 victims, routed via those 27 flagged exchanges. One platform alone handled Rs 360.16 crore in suspicious traffic, while the smallest skimmed Rs 6.01 crore. These aren't fly-by-night ops—these are established exchanges that Indians trusted for their daily trades.
## How the Siphoning Machine Works: A Step-by-Step Breakdown
Crypto's allure is its decentralization—no banks, no borders, just code. But that's exactly what makes it ripe for abuse. Here's the playbook cybercriminals are using, as pieced together from the I4C's analysis:
- **The Hook**: Victims fall for classic scams—fake investment apps, phishing links, or "recovery" services promising quick riches. In one Bengaluru case, a woman lost nearly Rs 32 crore in months.
- **The Transfer**: Stolen rupees are converted to crypto on Indian exchanges. Blockchain ledgers record every move publicly, but wallet addresses hide real identities like a digital VPN.
- **The Laundry Cycle**: Funds hopscotch across global platforms—often to lax jurisdictions like certain offshore islands—using "mixers" to tumble and anonymize them. From there, they re-emerge as "clean" assets for the crooks.
- **The Exit**: Laundered crypto funds real-world luxuries: Think investor summits wooing Indian elites or even a Mumbai bash for Elon Musk's mom, Maye Musk. (Yes, really—one Russian crypto mogul, fresh off a Kevin Spacey flick, threw that party.)
Indian exchanges like CoinDCX, WazirX, and CoinSwitch aren't directly accused here, but the probe highlights how regulatory fog lets such schemes thrive. Ownership often hides under foreign shells, making oversight a nightmare.
## The Human Cost: 2,872 Victims and Counting
Behind the numbers are shattered dreams. That Rs 623 crore isn't faceless—it's retirement savings, family funds, and hard-earned salaries vanished overnight. The I4C's data paints a grim picture: Average losses per victim hover around Rs 2.17 lakh, but outliers like the Bengaluru dupe show how deep the hooks sink.
This isn't isolated. India's cyber-fraud epidemic has surged, with crypto as the getaway car. Victims, often tech-savvy millennials, report to helplines only to hit walls—no dedicated crypto ombudsman, no SEBI safety net. The frustration? Palpable.
## Regulatory Roulette: India's Crypto Dilemma
Why hasn't this been stopped? Blame the grey zone. India taxes crypto harshly—1% TDS on trades, 30% on gains—driving volumes offshore by 97% since 2022 (Rs 35,000 crore fled to foreign platforms). The Finance Ministry's brewing a "discussion paper" on regulation, but it's exploratory at best. Regulate too tight, and you "endorse" a volatile asset; too loose, and you invite chaos.
Enforcement hurdles abound: Seized crypto (like $4 million held by one agency) rots in limbo, awaiting guidelines. The Enforcement Directorate twiddles thumbs, and exchanges freeze withdrawals at will with zero recourse for users. Globally, it's patchy—Japan and the EU demand licenses, but spots like the US see pardons for laundering kingpins (cough, Binance's CZ).
## Global Shadows: Lessons from the ICIJ Probe
The Coin Laundry isn't India-exclusive. It's a worldwide web: Russian oligarchs funding Bollywood tie-ups, sanction-busters evading walls, and hackers cashing ransomware hauls. The probe spotlights how crypto mirrors old-school havens—fast, anonymous, and profitable for the unscrupulous.
Yet, hope flickers. Fines are climbing, and tools like blockchain analytics are arming watchdogs. In India, I4C's flagging of these 27 exchanges is a start—expect audits, freezes, and maybe even shutdowns.
## What Investors Should Do Right Now
If you're dipping toes in crypto amid this storm:
- **Vet Ruthlessly**: Stick to FIU-registered exchanges. Check for red flags like unreal returns or pressure tactics.
- **Secure Up**: Use hardware wallets, enable 2FA, and never share seeds. Report scams to cybercrime.gov.in immediately.
- **Diversify Wisely**: Crypto's fun, but don't bet the farm—it's volatile even without thieves.
Push for change: Lobby for a proper framework. India can't afford to lag while the world tightens the noose.
## Final Thoughts: Time to Clean the Coin Laundry
The Coin Laundry scandal isn't just a crypto contagion—it's a symptom of unchecked digital wild-westing. With Rs 623 crore gone and 2,872 lives upended, India's regulators must act: License exchanges, empower victims, and bridge the enforcement gap. For investors, it's a stark reminder—blockchain's transparent, but trust? That's earned the hard way.
What do you think? Has this shaken your faith in crypto, or is it just growing pains? Drop your takes in the comments. Stay vigilant, folks—the next block might be yours to mine safely.
*Sources: Financial Express, Indian Express, and ICIJ investigations.*
