Crypto exchanges to avoid if you are Indian: Red flags and real risks in 2025
Indian Crypto Exchange Compliance Checker
If you're trading crypto in India, picking the wrong exchange could cost you everything. Not because the market is risky - it is - but because some platforms are outright unsafe under Indian law. You might think all exchanges are the same, but that’s not true. Some are playing by the rules. Others are ignoring them, and you’re the one who pays the price.
Why compliance isn’t just a buzzword
The Financial Intelligence Unit of India (FIU-IND) is the gatekeeper. It doesn’t hand out licenses, but it does enforce rules. If an exchange doesn’t register with FIU-IND, it’s operating in the gray zone - and that’s dangerous for you. Indian banks won’t touch non-compliant platforms. That means your INR deposits get blocked. Your withdrawals vanish into thin air. And if something goes wrong? No one is coming to help.Even if you’re just buying Bitcoin or trading Ethereum, you’re still under India’s financial radar. The government tracks crypto transactions. If you use a platform that doesn’t report to FIU-IND, you could end up flagged for money laundering - even if you did nothing illegal. The Enforcement Directorate (ED) doesn’t care if you’re a small trader. They care if the exchange you used is on their watchlist.
WazirX: The 230 million dollar mistake
WazirX used to be India’s biggest crypto exchange. Six million users. $5.4 billion in monthly volume. Backed by Binance. Connected to the Blockchain India Fund. It looked safe.Then, in July 2024, it got hacked. A multi-signature wallet was breached. $230 million in user funds disappeared. Not a glitch. Not a small loss. A total collapse of trust.
What happened after? WazirX announced a restructuring. Said they’d fix things. But months later, users still can’t withdraw their money. The platform is holding funds hostage under the excuse of "restructuring." No clear timeline. No official communication. Just silence.
And here’s the kicker: WazirX still supports over 250 cryptocurrencies. It still lets you trade. But your money? Locked. If you’re holding crypto on WazirX right now, you’re not trading - you’re waiting. And waiting for a platform that’s already proven it can’t protect your assets.
Binance and Bybit: Global giants, local problems
Binance is the world’s largest crypto exchange. But in India, it’s a problem. In 2023 and 2024, Indian authorities fined Binance over $10 million for failing to register with FIU-IND. They didn’t just ignore the rules - they ignored repeated warnings.Bybit got hit too. Millions in penalties. Same reason: no compliance. These platforms don’t have Indian banking partnerships. No legal entity in India. No tax reporting tools. No customer support you can actually reach.
Here’s what that means for you: If you trade on Binance or Bybit using an Indian bank account, your deposits might get frozen. Your withdrawals might vanish. You might get a notice from the tax department because the exchange didn’t send your transaction data - so now you’re responsible for proving everything manually. And if you get hacked? Good luck getting help from a company headquartered in the Cayman Islands.
The hidden costs of non-compliant exchanges
It’s not just about getting hacked or having your money locked up. There are quieter, slower ways these exchanges hurt you.Banking issues: Indian banks classify non-FIU-compliant exchanges as high-risk. That means your UPI, NEFT, or IMPS transfers might get rejected without warning. No explanation. No refund. Just a failed transaction.
Tax nightmares: India taxes crypto profits at 30%. There’s also a 1% TDS on every sale over ₹50,000. But non-compliant exchanges don’t give you tax reports. You’re left to track every single trade, every fee, every withdrawal - manually. One mistake, and you’re facing penalties from the Income Tax Department.
No recourse: If an exchange freezes your account because of "suspicious activity," and you didn’t do anything wrong, there’s no appeal process. No ombudsman. No customer service hotline that answers. You’re on your own.
Legal exposure: Even if you’re not laundering money, using a non-compliant exchange puts you on the radar of agencies like the ED. They don’t need proof of wrongdoing to start an investigation. Just association with a flagged platform is enough to trigger scrutiny.
What makes an exchange safe for Indian users?
You don’t need to guess. There are clear signs of a trustworthy exchange:- FIU-IND registration: Check if the exchange is listed as registered with FIU-IND. (There’s no public directory, but reputable platforms openly state their compliance status.)
- Indian banking partners: Does it work with ICICI, HDFC, Paytm, or PhonePe? If yes, that’s a good sign.
- Tax reports: Does it generate Form 16A or downloadable transaction history that matches Indian tax rules?
- Customer support in India: Can you call or chat with someone based in India? Or are you stuck with a chatbot that speaks only English and takes 72 hours to respond?
- Transparency: Do they publish security audits? Do they use cold storage? Do they disclose ownership and leadership?
Platforms like CoinDCX, CoinSwitch, ZebPay, Unocoin, and Bitbns have built their operations around Indian regulations. They’ve partnered with banks. They file tax reports. They’ve responded to FIU-IND notices. They’re not perfect - but they’re trying to play by the rules.
What to do right now
If you’re on WazirX, Binance, or Bybit - stop trading. Don’t deposit more money. Start withdrawing what you can. If your funds are locked, document everything. Save screenshots, transaction IDs, support tickets. You might need them later.Move your crypto to a self-custody wallet like Trust Wallet or Ledger. Keep your private keys safe. Then, open an account with a compliant Indian exchange. Transfer your assets there. Use it for future trades.
Don’t wait for the government to make a list. It won’t. The regulatory environment is still evolving. But the risks are clear. Exchanges that ignore FIU-IND are gambling with your money. Don’t be their next victim.
India has over 15 million crypto traders. That’s more than most countries. But only a few exchanges are built for this market. The rest are just global platforms trying to cash in - without taking responsibility for what happens to you.
Choose wisely. Your money, your future, your legal safety - it all depends on which exchange you trust.
Is it illegal to trade crypto on Binance or Bybit in India?
No, trading crypto is not illegal in India. But using exchanges that don’t comply with FIU-IND regulations puts you at legal and financial risk. You won’t be arrested for trading, but your funds could be frozen, your bank account flagged, or you could be investigated for money laundering if the exchange is under scrutiny.
Can I get my money back from WazirX after the hack?
As of November 2025, WazirX has not returned user funds lost in the July 2024 hack. The platform claims it’s restructuring, but there’s no timeline, no clear plan, and no transparency. Many users have filed complaints with consumer courts and the RBI, but recovery remains uncertain. Treat any funds on WazirX as potentially lost.
Do Indian crypto exchanges report to the tax department?
Compliant exchanges like CoinDCX and ZebPay generate tax reports that align with Indian laws, including TDS deductions and transaction summaries. Non-compliant platforms like Binance and Bybit do not. If you trade on those, you’re responsible for calculating your own capital gains and filing taxes manually - with no help from the exchange.
What’s the safest way to store crypto in India?
Use a self-custody wallet like Trust Wallet, MetaMask, or a hardware wallet like Ledger. Keep your private keys offline. Don’t leave large amounts on any exchange - even compliant ones. Exchanges can be hacked, frozen, or shut down. Your crypto is only truly yours when you control the keys.
Are there any official lists of approved crypto exchanges in India?
No. As of May 2025, FIU-IND has not published an official list of compliant exchanges. However, platforms that openly state their FIU registration, partner with Indian banks, and provide tax reports are generally considered safer. Always verify compliance through direct communication with the exchange and check for recent regulatory news.
Sunidhi Arakere
November 5, 2025 AT 16:40It’s scary how many people still trust exchanges that don’t follow Indian rules. I’ve seen friends lose months of savings waiting for WazirX to "fix" things. No one answers calls. No emails get replied to. Just silence.
Vivian Efthimiopoulou
November 7, 2025 AT 04:18The philosophical weight of this post cannot be overstated. We are not merely trading assets-we are participating in a fragile social contract between individual autonomy and institutional accountability. When an exchange ignores FIU-IND, it does not merely violate regulation-it erodes the very foundation of trust that underpins financial civilization. To use such a platform is to willingly step into a legal void where the state, though silent, is always watching.
Angie Martin-Schwarze
November 9, 2025 AT 02:54ok but like… why do we even bother with all this? i just wanna buy dogecoin and chill 😭 also i think wazirx is fine?? they had a hack but like… everything has hacks??
Fred Kärblane
November 9, 2025 AT 14:01Compliance isn't optional-it's foundational to DeFi infrastructure in regulated markets. Non-FIU-IND platforms lack KYC/AML infrastructure, which means they're inherently non-compliant with India’s PMLA framework. That’s not a suggestion-it’s a regulatory requirement. If you're not on a compliant exchange, you're not just at risk-you're actively creating systemic exposure for yourself and the broader ecosystem.
Janna Preston
November 10, 2025 AT 17:20I’m confused-so if I use Binance, I can’t get tax reports, but I still have to pay 30% tax? How do I even track all my trades if I don’t have a CSV? I’ve done like 200 trades this year… I’m not doing this manually.
Meagan Wristen
November 11, 2025 AT 13:34This is so important. I’ve been watching this space for years, and I just want to say thank you for laying it out so clearly. So many people don’t realize how much is at stake-not just money, but peace of mind. I switched to CoinDCX last year and finally feel safe. It’s not glamorous, but safety isn’t about hype-it’s about sleep at night.
Becca Robins
November 13, 2025 AT 07:39why are we even talking about this like it’s a big deal?? 🤡 crypto is supposed to be wild and free!! why do we need banks and forms and stuff?? i just want to moon and chill 😎
Alexa Huffman
November 13, 2025 AT 19:51I really appreciate how well-researched this is. I moved my funds from Bybit to ZebPay after reading this. The customer service on ZebPay actually answered me within 2 hours-on a Sunday. That alone made me feel seen as a user. Small things matter.
gerald buddiman
November 15, 2025 AT 05:15Wait… so if I used Binance and got hacked, I’m SOL? No insurance? No recourse? No one to call? I thought crypto was supposed to be decentralized and user-owned… but now I’m realizing… I’m just a data point in someone else’s offshore ledger. This feels… terrifying.
Arjun Ullas
November 15, 2025 AT 16:13As a financial compliance officer with 12 years of experience in Indian fintech, I can confirm: FIU-IND registration is not a suggestion. It is a mandatory condition under the Prevention of Money Laundering Act. Any platform that operates without it is not merely non-compliant-it is operating illegally. The fact that users still deposit funds on such platforms is a systemic failure of financial literacy. Educate yourself-or lose everything.
Steven Lam
November 16, 2025 AT 12:27Everyone’s acting like this is some big revelation but honestly if you’re trading crypto you should know better than to trust any exchange. This isn’t a government problem-it’s a personal responsibility problem. You want safety? Don’t use exchanges. Own your keys. End of story.
Noah Roelofsn
November 17, 2025 AT 11:13Let me paint the picture: Imagine you hand your life savings to a stranger in a trench coat who says, 'Trust me, I'm legit.' Then the stranger vanishes with your cash-and you’re left holding a receipt written in invisible ink. That’s what non-compliant exchanges are. They’re not just risky-they’re con artistry dressed up as innovation. And the worst part? You’re the one who gets blamed when the house of cards collapses.