Indian Crypto Exchanges Under IT Scrutiny for Alleged Client Fund Misuse

Indian tax authorities turn up the heat on crypto platforms suspected of playing fast and loose with investor money.

The Investigation Unfolds

Multiple exchanges now face intense scrutiny from India's Income Tax Department—regulators aren't buying the 'tech glitch' excuses anymore. Whispers of fund diversion, unauthorized lending, and questionable liquidity management have pushed officials into full audit mode.

Client funds—supposedly ring-fenced—reportedly ended up financing speculative trades, covering operational losses, and even propping up affiliated token projects. Some platforms allegedly created shadow accounts to mask shortfalls when markets turned volatile.

Regulatory Reckoning

This isn’t just a slap on the wrist. Penalties, frozen assets, and potential license revocations loom for violators. The crackdown signals India’s hardening stance toward crypto compliance—no more wild west finance on their watch.

Investors left holding the bag—again. Because nothing says 'financial innovation' like old-school embezzlement with blockchain branding.