Binance and WazirX Under Fire as India Probes Terror-Linked Crypto Flows

• India’s FIU is tracking suspicious crypto wallets linked to Pakistan-based entities.
• A court affidavit links WazirX wallets to ISIS through TRX token transfers.
• Users demand answers as WazirX faces ₹1,284 crore in unexplained transactions.

Binance and WazirX are facing intensified scrutiny as India’s Financial Intelligence Unit (FIU) investigates crypto transactions allegedly linked to terror funding. The investigation is centered around unregulated wallet activity between India and Pakistan, raising national security concerns.

According to officials cited by Money Control, the FIU is examining wallet transfers involving private crypto addresses not tied to any exchange. These wallets are believed to be receiving funds from Pakistan, complicating efforts to trace the sources and recipients.

The transfers have reportedly increased in regions near the Jammu and Kashmir border.

Authorities suspect that some of these transactions may be funding unlawful or terror-related activity. Binance is currently providing data to Indian regulators to help identify users tied to these wallets. WazirX, which was previously in the spotlight for disputing its need to register with FIU, is now under official investigation.

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Court Documents Reveal Direct Wallet Links to Extremist Networks

Adding weight to the probe, a new affidavit filed in Singapore’s High Court by Romy Johnson claims that wallets managed by WazirX were used to send TRX tokens to a Syria-based entity linked to ISIS. The 72-page document could play a key role in the upcoming court hearing on July 15.

User concerns have escalated as WazirX users demand answers from founder Nischal Shetty over several financial and operational issues. These include the lack of Proof of Reserves, the absence of wallet signatory disclosures, and related-party transfers worth ₹364 crore.

Users are also questioning the handling of ₹920 crore in revenue that remains unaccounted for. The Singapore High Court had earlier rejected the restructuring plan submitted by WazirX’s parent firm, Zettai.

The plan failed due to undisclosed dealings, including the formation of a Panama-based subsidiary and missing regulatory licenses. Additionally, Zettai allegedly grouped unhacked user funds with those stolen in a previous breach, violating trust laws and prompting legal action.

The FIU’s investigation and the upcoming court verdict could set a significant precedent for how crypto exchanges operate in India. If authorities establish links to terror activities, exchanges like WazirX and Binance may face long-term regulatory consequences.

Conclusion

With national security now tied to crypto regulations, the outcome of this case may influence how India monitors cross-border digital asset flows. The findings could lead to tougher compliance standards for all exchanges operating in the country.

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