India's Cryptocurrency Crackdown! Enforcement Directorate Seizes $465 Million, 29 Arrested

India’s parliament has disclosed that the Enforcement Directorate has seized criminal proceeds worth approximately 41.9 billion rupees (about $465 million) in cryptocurrency cases, arrested 29 individuals, and filed 22 charge sheets. One defendant has even been declared an economic fugitive. During search operations, authorities uncovered undeclared income from virtual digital asset (VDA) transactions totaling 8.8882 billion rupees (about $100 million).

44,000 People Notified: Comprehensive Tax Investigation Underway

In a written reply to the Lok Sabha, India’s Minister of State for Finance, Pankaj Chaudhary, said that the CBDT has sent notices to 44,057 taxpayers who traded or invested in virtual digital assets but failed to declare them in the VDA schedule of their income tax returns (ITR). This figure reveals that tax compliance issues in India’s cryptocurrency market are far more severe than previously thought.

During search and seizure operations, the CBDT found undeclared income from virtual digital asset transactions amounting to 8.8882 billion rupees (about $100 million). This undeclared income mainly comes from cryptocurrency trading profits, mining revenue, and returns on virtual asset investments. Indian tax law requires all VDA transactions to be reported in a dedicated schedule of the ITR, but a large number of investors choose to conceal these activities to evade taxes.

The government has included virtual digital assets under the Prevention of Money Laundering Act (PMLA), meaning that any suspicious cryptocurrency transactions can trigger money laundering investigations. This cross-departmental cooperation—tax authorities uncovering undeclared income and the Enforcement Directorate pursuing money laundering—forms a double blow against illegal activities in India’s cryptocurrency sector.

Enforcement Directorate Crackdown: 29 Arrested, 1 Declared Fugitive

The Enforcement Directorate has investigated multiple crypto-related cases under the PMLA, seizing or freezing criminal proceeds worth 41.8989 billion rupees, arresting 29 individuals, and filing 22 charge sheets. Notably, one defendant has been declared a fugitive economic offender, marking the first time such a severe legal sanction has been imposed in an Indian cryptocurrency case.

The legal consequences of being declared a fugitive economic offender are extremely serious. Under India’s Fugitive Economic Offenders Act, all assets of the declared individual are confiscated, and they are barred from initiating any civil litigation within India. These harsh measures are intended to deter potential economic offenders and demonstrate India’s determination to combat financial crime to the international community.

The 22 charge sheets cover a variety of crypto crime types: using virtual currencies for cross-border money laundering, transferring illicit funds via crypto exchanges, setting up fake accounts to evade regulation, and using decentralized finance (DeFi) platforms to conceal the source of funds. The common feature of these cases is the exploitation of India’s regulatory gap in cryptocurrency for illegal activities.

Regulatory Challenges and the Call for International Cooperation

Chaudhary admitted that crypto assets or virtual digital assets in India remain unregulated, and the government is promoting capacity-building programs to strengthen monitoring and investigation of VDA-related transactions. This regulatory vacuum is a key opportunity exploited by criminals. Since crypto assets are inherently borderless, strong international coordination is needed to prevent regulatory arbitrage.

He emphasized: “Any regulatory framework for crypto assets can only be effective with active international cooperation, risk and benefit assessments, and the establishment of common definitions and standards.” This view reflects the core challenge facing India’s cryptocurrency regulation—unilateral law enforcement measures are limited in the face of cross-border transactions.

The Indian government is working with the Financial Action Task Force (FATF), Interpol, and law enforcement agencies from major countries to establish cross-border crypto crime intelligence sharing mechanisms. This large-scale enforcement operation also sends a global signal: although India has yet to finalize cryptocurrency regulatory legislation, its enforcement efforts remain robust.