If you're an Indian crypto trader, your biggest risk isn't market volatility-it's using the wrong exchange. Many platforms claim to be safe, but behind the flashy interfaces and low fees lie serious dangers: frozen funds, no customer support, and even legal trouble. You don't need to guess which ones to avoid. Here are the exchanges that have repeatedly failed Indian users-and why you should steer clear.
WazirX: The Exchange That Lost $230 Million
WazirX was once India’s most popular crypto platform, with 6 million users and over $5.4 billion in monthly trading volume. It even had ties to Binance and the Blockchain India Fund. But in July 2024, everything collapsed. A hacker exploited a flaw in its multi-signature wallet and stole $230 million in user funds. That’s not a typo. Two hundred and thirty million dollars vanished overnight.
Instead of refunding users, WazirX announced a "restructuring." Months later, users still can’t access their money. The platform claims it’s working on a solution, but there’s no timeline, no clear communication, and no legal recourse under Indian law. If you’re still holding funds on WazirX, you’re gambling with money that may never return.
Binance: Penalized, Restricted, and Non-Compliant
Binance is the world’s largest crypto exchange-but in India, it’s a red flag. The Financial Intelligence Unit of India (FIU-IND) slapped Binance with millions in penalties for failing to register as a reporting entity under Indian anti-money laundering rules. That means Binance doesn’t follow Indian tax reporting standards, doesn’t cooperate with Indian authorities, and doesn’t provide transaction data for your crypto taxes.
Indian banks have blocked INR deposits to Binance. If you try to deposit rupees, your transaction will fail. If you withdraw, your account might get frozen without warning. And if something goes wrong? You’re on your own. Indian courts won’t help you because Binance operates outside India’s legal jurisdiction. For Indian traders, Binance is high-risk, high-frustration, and low-reward.
Bybit: The Exchange That Ignored Indian Rules
Bybit, known for its high-leverage trading, has also been hit with heavy penalties by FIU-IND. Like Binance, it refuses to comply with India’s reporting obligations. That means no tax reports, no transaction history you can use for filing 30% capital gains tax, and no support if your account gets flagged.
Indian users report being locked out of their accounts with no explanation. Some have waited over six months for responses from customer support-only to get automated replies. Bybit doesn’t partner with Indian banks, so deposits often vanish into a black hole. And if you’re audited by the Income Tax Department? You’ll have no proof of where your crypto came from. That’s a recipe for legal trouble.
Why Non-FIU Compliant Exchanges Are Dangerous
It’s not just about these three platforms. Any exchange that doesn’t comply with FIU-IND guidelines puts you at risk. Here’s what happens when you use them:
- Bank blocks: INR deposits get rejected. Withdrawals disappear. Your account freezes without notice.
- No tax help: You’re forced to manually track every trade across dozens of coins to calculate 30% capital gains and 1% TDS. One mistake, and you owe thousands in penalties.
- No customer support: Emails go unanswered. Live chat is nonexistent. Phone numbers don’t work.
- No legal protection: If the exchange gets hacked, shuts down, or disappears, Indian authorities won’t step in. You have zero recourse.
- ED investigations: The Enforcement Directorate has started probing users of non-compliant exchanges for possible money laundering-even if you didn’t do anything illegal. Just using the wrong platform can trigger an investigation.
The Hidden Costs of Using the Wrong Exchange
Most people think the risk is losing money to a hack. But the real danger is what happens after.
Imagine this: You bought Bitcoin on a non-compliant exchange in 2023. You sold it in 2025 for a profit. You didn’t report it because the exchange gave you no tax summary. Now, the Income Tax Department sends you a notice. You can’t prove your purchase price. You owe 30% tax on the entire gain, plus a 50% penalty. And because the exchange doesn’t cooperate, you can’t get the records you need to appeal.
That’s not hypothetical. It’s happening right now. Indian tax officers are actively cross-checking blockchain data with bank statements. If your crypto came from an unregulated platform, you’re already on their radar.
What Should You Use Instead?
You don’t need to give up crypto. But you do need to use exchanges that play by India’s rules. These platforms are known to comply with FIU-IND, partner with Indian banks, and provide tax reports:
- CoinDCX
- CoinSwitch Kuber
- ZebPay
- Unocoin
- Bitbns
These exchanges offer INR deposits, real customer support, and tax summaries that match Indian law. They’re not perfect-but they’re the safest options we have right now.
How to Check If an Exchange Is Safe
Don’t trust marketing claims. Here’s how to verify:
- Visit the FIU-IND website and check if the exchange is listed as a reporting entity (as of May 2025, no public list exists, but some exchanges publish their FIU registration number).
- Try depositing ₹100 via UPI or bank transfer. If it fails, walk away.
- Look for a "Tax Report" or "Income Statement" section in your account. If it’s missing, they’re not helping you comply.
- Search for recent news: Has the exchange been penalized? Did users report fund freezes?
- Check if they have a physical office in India. No address? Big red flag.
Final Warning
The crypto market moves fast. Today’s "safe" exchange could be tomorrow’s scandal. WazirX was trusted by millions before the hack. Binance and Bybit still have millions of Indian users despite penalties. But trust isn’t proof of safety.
If you’re serious about trading crypto in India, treat compliance like a firewall. Use only exchanges that report to FIU-IND, support INR, and give you tax documents. Anything else is a gamble you can’t afford to lose.