Image Source hindustantimes
New Delhi, November 18, 2025 — A massive, cross-border investigation titled “The Coin Laundry” has exposed a staggering ₹623.63 crore money laundering network that leveraged Indian cryptocurrency exchanges to siphon funds from nearly 3,000 victims of cybercrime within a 21-month period.
The probe, spearheaded by the Ministry of Home Affairs’ (MHA) Indian Cyber Crime Coordination Centre (I4C) in collaboration with international partners, has flagged at least 27 Virtual Asset Service Providers (VASPs)—the official term for crypto exchanges—as key conduits for the illicit funds.
The Anatomy of the Digital Launderette
The investigation reveals a chilling new hybrid system where cyber-criminals exploit the fledgling, and still largely unregulated, Indian virtual assets space to quickly convert stolen rupees into globally transferable cryptocurrencies.
- Victim to VASP : The trail began with victims of online fraud—often lured by fake trading or investment apps—who deposited money into “mule accounts” across India.
- The Crypto Conversion : These funds were swiftly consolidated and moved to accounts on Indian crypto exchanges, where they were instantly converted into tokens like USDT (Tether) or Bitcoin.
- Transnational Trail : The digital assets were then transferred out of India, often through a shadowy network involving over-the-counter (OTC) traders in hubs like Dubai, eventually reaching transnational syndicates operating out of places like China and Cambodia. The ease and speed of blockchain transactions allowed criminals to create near-infinite layers of layering, far surpassing the complexity of traditional hawala networks. The Tip of a Massive Iceberg
I4C records indicate that the ₹623.63 crore figure, siphoned from 2,872 victims between January 2024 and September 2025, is merely “the tip of the iceberg.”
The quantum of recorded crime proceeds highlights a significant vulnerability within even Indian exchanges that are registered with the Financial Intelligence Unit (FIU), the nation’s anti-money laundering authority.
Investigators are now focusing on two major compliance gaps:
- KYC and AML Lapses: The creation of unverified or fraudulent accounts using compromised or “mule” identities on domestic exchanges, allowing criminals to bypass basic Know Your Customer (KYC) and Anti-Money Laundering (AML) screenings.
- The ‘Crypto Mule’ Role: Probing whether Indian intermediaries are operating as ‘crypto mules,’ converting large volumes of scam proceeds into digital tokens for a commission, effectively serving as the new, digital version of the traditional hawala operator. Regulatory Race Against Time
The findings underscore the immense challenge facing Indian regulators. While the government brought cryptocurrencies under the Prevention of Money Laundering Act (PMLA) in 2023, the absence of a comprehensive licensing and regulatory framework for exchanges continues to create a “grey zone.”
Meanwhile, law enforcement agencies are grappling with the practical challenge of managing digital crime. As one official noted, the dilemma now extends to: where and how to securely store confiscated cryptocurrency?
The revelations from “The Coin Laundry” serve as a stark warning: as the global battle against traditional money laundering evolves, the digital frontier of finance is rapidly becoming the new, favored hideout for illicit wealth.
[Newsroom staff written original, where key claims or facts are used, I’ve referenced the original sources (like The Indian Express/ICIJ, Times of India, Al Jazeera, etc.) transparently.]
