Crypto exchanges to avoid if you are Indian

If you're trading crypto in India, picking the wrong exchange isn't just a bad choice-it could cost you everything. You might think all platforms are the same, but that’s not true. Some exchanges are legally risky, others are security disasters, and a few are holding your money hostage with no way out. As of 2025, Indian regulators are cracking down hard on platforms that ignore local rules. If you’re using one of these, you’re playing with fire-and you might not even know it.

Why compliance isn’t optional

The Financial Intelligence Unit of India (FIU-IND) is the gatekeeper. It doesn’t issue licenses, but it does enforce reporting rules. Any crypto exchange handling Indian rupees (INR) must register with FIU-IND and report all transactions. If they don’t, they’re breaking the law. And when they break the law, Indian authorities don’t just fine them-they freeze accounts, block bank transfers, and even launch investigations into users.

You might be wondering: "But I’m just buying Bitcoin. Why should I care about their paperwork?" Here’s why: if the exchange gets penalized, your INR deposits vanish. Your withdrawals get stuck. And if the platform shuts down or gets hacked, you have zero legal protection. Indian banks won’t help you. The police won’t help you. The government won’t help you-unless you used a compliant platform.

Binance: Global giant, local problem

Binance is the world’s biggest crypto exchange. It’s tempting to use it because of low fees and hundreds of coins. But in India, it’s a red flag. In 2023, FIU-IND fined Binance over $10 million for failing to register and report user data. Since then, Binance has stopped accepting INR deposits through most Indian payment channels. If you’re still using Binance to trade INR, you’re likely hitting dead ends-deposits failing, withdrawals stuck, customer support ghosting you.

Worse, Binance doesn’t provide tax reports that match India’s rules. You’re expected to track every trade, every transfer, every swap manually. With India’s 30% capital gains tax and 1% TDS on sales over ₹50,000, that’s a nightmare. And if the Enforcement Directorate (ED) starts looking into suspicious activity, your Binance account could trigger a money laundering probe-even if you did nothing wrong.

Bybit: High risk, no safety net

Bybit is another global exchange popular among Indian traders for its leverage trading and futures contracts. But here’s the problem: Bybit has been fined millions by FIU-IND for the same reasons as Binance-no registration, no reporting, no compliance. Indian banks have cut off Bybit. Your UPI or NEFT transfers might work once, then suddenly stop. No warning. No explanation.

And if something goes wrong? There’s no Indian customer support team. No local office. No legal recourse. If your account gets frozen or your funds disappear, you’re on your own. Indian courts won’t recognize Bybit’s terms of service as binding under Indian law. You’re essentially trading on a platform that operates outside the country’s financial system-and that’s a huge risk.

WazirX: The 0 million disaster

WazirX was India’s biggest homegrown exchange. With 6 million users and $5.4 billion in monthly volume, it felt safe. It even had ties to Binance and the Blockchain India Fund. But in July 2024, everything collapsed.

A hacker broke into WazirX’s multi-signature wallet and stole $230 million in crypto. That’s not a typo. Two hundred and thirty million dollars. And here’s the worst part: WazirX hasn’t returned the money. Instead, they’ve been restructuring-while holding onto user funds. Users report emails going unanswered. Withdrawal requests stuck for months. No clear timeline. No transparency.

Even worse, WazirX still operates. You can still log in. You can still trade. But you can’t withdraw your INR or crypto without jumping through endless hoops. Many users are trapped. And since WazirX isn’t fully compliant with FIU-IND, there’s no regulatory body stepping in to force them to pay you back.

What happens when you use a non-compliant exchange?

Using an exchange that ignores Indian rules doesn’t just put your money at risk-it puts your legal safety at risk too.

• Banks block your money: If the exchange isn’t FIU-IND registered, banks classify it as high-risk. Your UPI, IMPS, or NEFT transfers get rejected without warning.
• No tax help: You get zero reports. Zero summaries. Zero support for filing your 30% capital gains tax or 1% TDS. You’re forced to manually track every trade across wallets, which is nearly impossible without specialized software.
• No customer support: Time zones, language barriers, automated bots-you’re stuck. If your account is frozen, there’s no escalation path.
• ED investigations: Even if you’re innocent, using a non-compliant exchange can trigger a money laundering probe. The Enforcement Directorate doesn’t care if you didn’t know the rules. They see foreign exchanges, large INR flows, and they investigate.
• No insurance: Unlike banks, crypto exchanges don’t have deposit insurance. If they get hacked or vanish, your money is gone forever.

What to look for instead

You don’t have to give up crypto. But you do need to be smart. Stick to platforms that have proven they follow Indian rules.

CoinDCX, CoinSwitch Kuber, ZebPay, Unocoin, and Bitbns are the safest bets right now. They all:

• Register with FIU-IND
• Accept INR deposits via UPI and bank transfers
• Provide tax reports aligned with Indian law
• Have local customer support teams
• Use multi-signature wallets and cold storage

They’re not perfect. CoinDCX had a brief service outage in early 2025. ZebPay paused withdrawals for a week during a compliance audit. But they communicate. They fix issues. They don’t disappear.

How to check if an exchange is safe

There’s no official list from FIU-IND. But here’s how to protect yourself:

1. Check their website: Look for "Compliant with FIU-IND" or "Registered with FIU-IND" in the footer or legal section.
2. Test a small deposit: Send ₹500 via UPI. If it works, great. If it fails or gets reversed, walk away.
3. Look for tax reports: Can you download a CSV or PDF showing your buy/sell history with timestamps and INR values? If not, avoid it.
4. Search news: Type "[exchange name] + FIU fine" or "[exchange name] + hack India" into Google. If you see headlines about penalties or breaches, run.
5. Ask the community: Join Indian crypto Telegram groups or Reddit threads. Real users know who’s holding funds and who’s responsive.

The bottom line

India’s crypto market is huge-over 15 million people trade. But the rules are still being written. That means the safest path isn’t the flashiest, the cheapest, or the one with the most coins. It’s the one that follows the law.

Avoid Binance, Bybit, and WazirX. Not because they’re evil. But because they’ve shown they don’t care about Indian users’ safety. Your money, your taxes, your legal peace of mind-they’re not priorities for these platforms.

Stick with exchanges that have skin in the game. That have local offices. That answer your calls. That file reports. That don’t vanish when things go wrong. That’s not just smart trading. That’s protecting your future.