Security Agencies Uncover Crypto Hawala Network in Jammu & Kashmir
Security agencies have raised alarms about a sophisticated crypto hawala network operating in Jammu and Kashmir. Officials revealed on Sunday that this digital network is being used to bypass the country's financial safeguards. The system funnels untraceable foreign funds into the Union Territory, raising serious concerns that the money could finance terror activities.
Network Puts Security Establishment on High Alert
The discovery has put the entire security establishment on high alert. Officials warned that these shadow funds aim to revive separatist elements in the region. The money also seeks to reignite anti-national propaganda that had been largely curtailed following sustained crackdowns by police and central agencies.
Security experts expressed deep concern about the network's potential impact. They emphasized the need for immediate action to dismantle these financial channels before they cause further damage.
How the Crypto Hawala Network Operates
According to officials, this digital version mirrors the traditional hawala system where money moves through non-banking channels. The crypto hawala network operates entirely off the grid, using the anonymity of unregulated cryptocurrency to erase financial trails. This allows operators to inject cash directly into the domestic economy without detection.
An investigation by Jammu and Kashmir Police, coordinated with central security agencies, uncovered specific operational details. Handlers based in multiple countries including China, Malaysia, Myanmar and Cambodia were directing individuals in the Union Territory to create private cryptocurrency wallets.
These wallets were typically set up using Virtual Private Networks (VPNs) to evade detection. Most concerning was that these wallets did not require Know Your Customer (KYC) verification or proper identity checks, making them completely anonymous.
VPN Services Suspended in Kashmir Valley
In response to these findings, Jammu and Kashmir Police has suspended the use of VPN services in the Valley. Authorities noted growing indications that such tools were being used to facilitate crypto wallet registrations. Security officials view VPNs as handy tools for terrorists and separatists to avoid detection while conducting their operations.
The suspension represents a proactive measure to disrupt the network's operations. Officials hope this will make it more difficult for handlers to establish new cryptocurrency wallets in the region.
Conversion Process Breaks Financial Trails
Officials explained the detailed conversion process that makes this network so effective. Foreign handlers transfer cryptocurrency directly into private wallets, placing funds under local control without routing them through regulated financial institutions.
Wallet holders then travel to major cities like Delhi or Mumbai. There they meet unregulated peer-to-peer (P2P) traders and convert cryptocurrency into cash at negotiated rates. This process effectively breaks the financial trail, allowing foreign funds to enter the local economy as completely untraceable cash.
Mule Accounts Form Network Backbone
The network relies heavily on mule or parking accounts that layer transactions to obscure money trails. Syndicates have established a structured commission mechanism to keep the system running smoothly. Account holders earn between 0.8 and 1.8 percent per transaction, making participation financially attractive.
These accounts typically belong to ordinary individuals drawn in by commission promises. They are reassured that their role is low-risk, limited to temporarily parking funds. In reality, full control of these accounts including net banking usernames and passwords is handed over to network operators.
A single operator usually gains access to multiple mule accounts simultaneously, often ranging from 10 to 30 accounts at a time. This creates a complex web of financial transactions that becomes extremely difficult to trace.
New Challenge in Off-Exchange Trading
The emergence of crypto hawala represents a new challenge linked to off-exchange trading. By operating in the grey market, such networks bypass anti-money laundering regulations that apply to registered financial entities. This creates significant gaps in the country's financial monitoring systems.
Security agencies are now developing new strategies to combat this digital threat. They recognize that traditional financial monitoring methods may not be sufficient to track cryptocurrency-based transactions operating outside regulated channels.
The investigation continues as agencies work to identify all individuals involved in this sophisticated network. Officials remain committed to dismantling these financial channels that threaten national security in Jammu and Kashmir.
