Crypto crackdown: India aims at darknet transactions in drug war

• India’s NCB targets darknet crypto misuse amid rising drug trafficking cases.
• Recent crackdowns uncover massive scams, highlighting the urgent need for stricter crypto regulations.

With the increasing adoption of cryptocurrency, there has also been a notable rise in its misuse for illicit activities such as scams, fraud, and drug trafficking.

India’s role in curbing crypto misuse

To address these issues, India’s Narcotics Control Bureau (NCB) is actively monitoring cryptocurrency transactions on the darknet as part of its comprehensive strategy to combat drug trafficking.

That being said, during a Parliamentary session on 24th July, Nityanand Rai, the Minister of State for Home Affairs, outlined India’s current approach to curbing the import and inter-state movement of narcotic drugs. 

According to a report released by the Government of India’s Ministry of Home Affairs, 

“Narcotics Control Bureau (NCB) has booked 92 cases involving Darknet and Crypto-currencies whereas 1025 cases involving parcel/ couriers have been reported by all Drug Law Enforcement Agencies during the years 2020-2024 (till April).”  

Source: Narcotics Control Bureau

The rise of crypto in drug trafficking

This highlights that the use of cryptocurrencies in drug-related crimes in India has fluctuated, but drug seizure cases involving the Darknet and cryptocurrencies have steadily risen since 2022.

To tackle this, Rai suggested, 

“A Special Task Force on Darknet and Crypto Currency has been constituted to monitor suspicious transactions related to drugs on Darknet.”

Additionally, the report further provided a state-wise breakdown of drug trafficking cases, revealing that the state of Punjab recorded the highest number of such cases in India from 2020 to 2022.

Source: Narcotics Control Bureau

Some recent case studies

In a recent case, the Enforcement Directorate (ED) of India, in collaboration with the US Federal Bureau of Investigation (FBI), uncovered a Rs 3,000 crore scam involving digital currencies in Uttarakhand.

This extensive operation resulted in the arrest of two individuals suspected of running an international drug trafficking network.

Additionally, a joint effort between India and the U.S. targeted a $360 million crypto-funded drug ring, underscoring the urgent need for stricter regulations.

The need for strict regulation

Gaurav Mehta, a social activist and CEO of Dharma Life, highlighted these regulatory concerns in the digital space.

He further emphasized the necessity for comprehensive policies to prevent the misuse of cryptocurrencies in criminal activities and noted, 

“The absence of regulation further emboldens criminals, as the existing justice system and law enforcement agencies lack the focus, capacity, and competency to combat crypto-related crimes. This regulatory void leaves victims in a state of helplessness,”