New Delhi, Aug 30 (IANS) The raids conducted by the Jammu and Kashmir Police’s State Investigation Agency (SIA) last month over terror funding through cryptocurrency was an eye-opener. The searches were carried out to collect evidence that involved cross-border funding through cryptocurrency to fund terror in Jammu and Kashmir.
This is probably the first reported incident of cryptocurrency being used to fund terror activities in India.
The raids did yield results and the SIA recovered electronic devices. It also exposed a secret financial network that was being used to fund terror in Jammu and Kashmir.
“These search operations reflect the State Investigation Agency’s unwavering determination to safeguard the sovereignty and integrity of the nation while ensuring the safety and security of the people of the Union Territory of Jammu and Kashmir,” the SIA had said in its statement.
This marks a major shift in how terror in India has been funded by Pakistan. Funds for terror are usually raised through illegal donations, narco trade, arms smuggling and counterfeiting. The money would reach terror groups through hawala transaction in most cases.
It was the Hamas back in 2019 that started this trend of raising funds through cryptocurrency donations. After it came to light, the United States seized around 200 websites and 150 cryptocurrency accounts linked to the Hamas.
What the SIA investigation has revealed that Pakistan has set up a mechanism through which it can fund terror activities in India through cryptocurrency. What exactly changed in Pakistan so suddenly considering that it was extremely suspicious of digital currency until sometime back.
A lot changed since March 2025, when Pakistan created the Pakistan Crypto Council and appointed Canadian-Chinese businessman as its adviser. Further an agreement was also signed with World Liberty Financial, a crypto company that is linked with the family of US President Donald Trump.
To the outside world, it looks like Pakistan only intended to attract investments and also build ties with President Trump. However, the worry for India is that this also provides Pakistan a way to fund terror through cryptocurrency. This method allows the funding to remain anonymous.
The earlier forms of funding would provide investigators with a financial trail. Many activities of terrorists have been linked to Pakistan only because the agencies were able to chase the money trail.
Also, in the war against terror choking funding is an important aspect. In the battle against the separatists in Jammu and Kashmir, one of the key aspects that led to their downfall was when their funding was choked and this the agencies were able to do since they were able to chase the trail.
Currently, to combat this new form of funding, the resources are inadequate and it would take a bit of time before the agencies are able to get a grip over it.
Pakistan has understood these challenges and hence has made a quick move towards embracing this new technology. Not only can the funding remain anonymous, but it could also avoid the money trail. This indicates that Pakistan is now ready to ditch its traditional methods of funding terror and adopt newer technologies, which appear like legitimate transactions.
A report by the Financial Action Task Force (FATF) had flagged the misuse of e-commerce platforms, social media and online payment to fund terror activities.
“Today’s report outlines current and evolving methods employed by terrorist organisations and individuals to raise, move, store and use funds and assets, including cash transportation, hawala and other similar service providers, money value transfer services, online payment services, formal financial services, digital platforms (including social media such as Facebook, Telegram and crowdfunding features), virtual assets and the abuse of legal entities, such as shell companies, trusts and non-profit organisations (NPOs),” the FATF said.
The National Investigation Agency (NIA) had flagged the use of Chinese apps, crypto wallets, satellite phones and Darknet in terror activities. This came to light during the investigations into the Rameswaram Cafe blast (2024), Pulwama attack (2019), Bihar-Nepal Fake Indian Currency seizures and the Laos cyber slavery case.
“Tracing financial trails related to increasingly frequent ethnically, racially or politically motivated terrorist attacks comes with its own set of challenges, including inconsistent designations and proscriptions, as well as low scale and visibility of financial activity in the preparation of attacks,” the FATF report had also said.
–IANS
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