The Financial Intelligence Unit of India (FIU-IND) has issued compliance notices to 25 offshore Virtual Digital Asset (VDA) service providers for violating provisions of the Prevention of Money Laundering Act (PMLA), 2002.
The action comes under Section 13 of the PMLA, which mandates registration and reporting obligations for entities dealing in VDAs.
The FIU has also invoked Section 79(3)(b) of the Information Technology Act (IT Act), 2000, to order the takedown of websites and applications of these platforms, citing illegal operations in India that flout PMLA.
Section 79 of the IT Act protects platforms from liability for user-generated content. However, Part 3(b) of this section states that platforms can lose this protection if they fail to remove unlawful content after being notified by the government.
Which Offshore Firms Are Involved?
The list includes global crypto exchanges and platforms such as Huione, BC.game, Paxful, Changelly, CEX.IO, LBank, Youhodler, BingX, PrimeXBT, BTCC, CoinEx, Remitano, Poloniex, BitMex, Bitrue, LCX, Probit Global, BTSE, HIT BTC, LocalCoinSwap, AscendEx, Phemex, ZooMex, CoinCola and CoinW.
These companies, headquartered across jurisdictions such as the United States, United Kingdom, Hong Kong, Seychelles, Singapore, Lithuania, and the Cayman Islands, were found catering to Indian users without registering with the FIU-IND.
Legal Requirement for Crypto Firms
Since March 2023, VDA service providers operating in India, whether domestic or foreign, are required to register with FIU-IND as “reporting entities” under the AML-CFT (Anti-Money Laundering and Counter-Financing of Terrorism) framework.
The obligations include reporting transactions, maintaining records, and following due diligence norms, irrespective of whether the company has a physical office in India.
So far, 50 VDA service providers have registered with FIU-IND. However, the regulator continues to identify platforms that offer services to Indian customers while remaining outside the compliance framework.
Industry Response and Market Scale
According to data cited by TechCrunch, 14 of the affected exchanges together hold over $9 billion in assets and recorded nearly $20 billion in trading volume within 24 hours on October 1.
Notably, CEX.IO was among the few firms to respond to TechCrunch. “We are in the research process and will definitely ask and explain our position to the regulator regarding this notice,” said Mark Taylor, head of financial crime at CEX.IO, in a statement.
“We are actively exploring pathways to ensure alignment with India’s regulatory requirements and any required registration with Indian authorities to ensure long-term accessibility for our users in the region,” he added.
Taylor urged Indian users to closely follow updates from both regulators and CEX.IO, noting that the FIU-IND order may affect access, payment options, or app availability. He added that if any…
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