Indian authorities have launched an investigation into global crypto exchange Binance after suspicious crypto transfers from Pakistan were flagged through its platform, according to a new report by Chain Retrieval. The probe focuses on possible links to illegal activities, including fraud, money laundering, and terror financing.
Government agencies have raised concerns that Binance may have been used as a channel for unregulated fund transfers between individuals and entities in Pakistan and India. While Binance is not directly accused of wrongdoing, investigators are probing whether its lack of strict KYC (Know Your Customer) compliance enabled malicious actors to exploit the platform.
According to the Chain Retrieval report, India’s Financial Intelligence Unit (FIU) and Enforcement Directorate (ED) are closely monitoring crypto wallet addresses, transaction histories, and exchange records associated with flagged users. Some of these addresses reportedly belong to individuals previously investigated for digital payment frauds and illegal betting operations.
The investigation also aligns with growing global pressure on centralized exchanges to tighten anti-money laundering (AML) procedures. India, like several other countries, has expressed concerns over the anonymity that crypto platforms may provide, especially in high-risk cross-border transfers.
Chain Retrieval Uncovers Patterns Pointing to Organized Abuse
The Chain Retrieval report suggests that Binance was used to route crypto from Pakistani users to Indian counterparts via decentralized wallets and peer-to-peer (P2P) trading—bypassing traditional banking checks. These transactions were often fragmented, routed through third-party intermediaries, and settled in stablecoins like USDT.
Some patterns reportedly pointed to the use of crypto for illegal betting apps, which are already under investigation in India. There are also fears that some funds may have been diverted to support activities in sensitive regions, though officials have yet to confirm such links publicly.
In response to mounting pressure, Binance has stated its commitment to cooperating with regulators and ensuring full compliance with Indian laws. However, Indian regulators argue that the exchange must do more to localize compliance, as it continues to operate in a gray zone without formal licensing in India.
The incident comes at a time when India is pushing for global crypto oversight, particularly at the G20 level, where it has called for shared frameworks to monitor international crypto flows and prevent exploitation.
Industry leaders are now urging users to avoid P2P transactions with unknown parties and to conduct crypto activity only through verified, licensed platforms.
The Binance probe may set a precedent in India’s broader crackdown on crypto misuse, with authorities likely to expand scrutiny to other offshore exchanges operating without local oversight.
📌 Cross-border crypto transfers are not invisible—regulators are watching.
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