Crypto Exchanges to Avoid if You Are Indian in 2025

If you're trading crypto in India, picking the wrong exchange isn't just a bad choice-it could cost you your money, your time, and even land you in legal trouble. The rules aren't always clear, but the risks are. And some exchanges are actively making things worse for Indian users.

Why Some Exchanges Are Dangerous for Indians

India doesn't ban crypto trading, but it doesn't protect you either. The Financial Intelligence Unit of India (FIU-IND) sets the ground rules for crypto platforms, and if an exchange ignores them, you're on your own. No insurance. No legal recourse. No help from banks or authorities if things go wrong.

Many international exchanges don't bother getting FIU-compliant. They treat India like any other market-until the penalties hit. And when they do, Indian users are the ones stuck holding the bag.

WazirX: The Giant That Crumbled

WazirX was India’s biggest homegrown exchange. Over 6 million users. $5.4 billion in monthly trades. Backed by Binance and the Blockchain India Fund. It looked safe.

Then, in July 2024, it got hacked. A multi-signature wallet was breached. $230 million vanished. Not a small amount. Not a glitch. A total collapse of security.

Instead of returning funds, WazirX announced a "restructuring." Months later, users still can’t access their money. Customer support is silent. The platform still lists 250+ cryptocurrencies and charges trading fees between 0.10% and 0.40%, but none of that matters if your coins are locked away forever.

If you’re still using WazirX, you’re not trading crypto-you’re gambling with your savings.

Binance: Penalized, Not Protected

Binance is the world’s largest crypto exchange. But in India, it’s a problem child. The FIU-IND slapped Binance with millions in penalties for failing to report user data, implement KYC properly, and comply with anti-money laundering rules.

That’s not a warning. That’s a red flag. If the regulator is fining them, they’re not playing by India’s rules. And when things go sideways-like a hack, a freeze, or a withdrawal delay-you won’t get help from Indian courts. Binance’s support team won’t even acknowledge your ticket if you’re from India.

Even if you think you’re using Binance’s global site, your INR deposits might get blocked. Your bank might flag your transactions. And if the Enforcement Directorate starts investigating suspicious crypto flows, your account could be pulled into a money laundering probe-even if you did nothing wrong.

Bybit: Another Foreign Exchange With a Target on Its Back

Bybit is popular for its high leverage and low fees. But it’s also been fined heavily by FIU-IND for non-compliance. Like Binance, it doesn’t have the proper licensing or reporting systems in place for Indian users.

The problem? Indian banks won’t work with Bybit. That means your UPI, NEFT, or IMPS transfers might vanish without a trace. No refund. No explanation. Just a failed transaction and a frozen account.

And if you make a profit? Good luck filing your 30% capital gains tax. Bybit doesn’t generate tax reports that match India’s rules. You’ll have to manually track every trade, every transfer, every fee-across years-just to avoid a notice from the Income Tax Department.

The Hidden Risks: Banking, Taxes, and Legal Trouble

It’s not just about getting hacked. It’s about everything else that goes wrong when you use a non-compliant exchange.

Banking issues: Indian banks see non-FIU exchanges as high-risk. They freeze accounts, reverse deposits, and shut down UPI links without warning. You might deposit ₹50,000 today and find it gone tomorrow-with no one to blame.

Tax nightmares: India taxes crypto profits at 30%, plus 1% TDS on sales over ₹50,000 per year. Compliant exchanges like CoinDCX and ZebPay auto-generate tax reports. Non-compliant ones? They give you a CSV full of raw data. No labels. No summaries. No help. You’re on your own to figure out what’s taxable, what’s not, and how to prove it.

Legal exposure: The Enforcement Directorate (ED) is actively tracking crypto transactions linked to non-compliant platforms. If your wallet history shows activity on Binance, Bybit, or WazirX during a crackdown, you could be summoned for questioning-even if you never traded illegal assets. The burden of proof falls on you.

What Makes an Exchange Safe for Indians?

You don’t need to guess. Look for these three things:

• FIU-IND registration: The exchange must be registered with India’s financial intelligence unit. No exceptions.
• Bank partnerships: It should have active INR deposit routes through major banks or UPI gateways. If deposits keep failing, walk away.
• Tax reporting tools: It should offer downloadable tax reports that align with Indian law-date, amount, type, and profit/loss for each trade.

Platforms like CoinDCX, CoinSwitch Kuber, ZebPay, Unocoin, and Bitbns have shown consistent efforts to comply. They work with Indian banks. They provide tax documents. They respond to user complaints. They’ve survived regulatory scrutiny so far.

That doesn’t mean they’re perfect. But they’re the safest options we have right now.

What Happens If You’re Already on a Bad Exchange?

If you’re on WazirX, Binance, or Bybit right now, here’s what to do:

1. Stop depositing INR. No more UPI, net banking, or card payments.
2. Withdraw your crypto. Move your coins to a personal wallet-like Trust Wallet or Exodus. Don’t leave them on the exchange.
3. Document everything. Save all transaction IDs, deposit receipts, and communication with support.
4. Start tracking your taxes. Use a tool like Koinly or CoinTracker to calculate gains and losses for the financial year.
5. Switch to a compliant exchange. Move your assets to CoinDCX or ZebPay and start fresh.

Don’t wait for the exchange to "fix" things. They won’t. WazirX has had over a year. Still no refunds.

The Bottom Line

India’s crypto rules are messy. But that doesn’t mean you have to be reckless. The exchanges that ignore FIU-IND rules aren’t just risky-they’re dangerous. And when they fail, you lose everything.

Stick to platforms that play by India’s rules. Even if they’re not perfect, they’re the only ones that might still be around when the next crackdown comes.

Your money isn’t just digital. It’s real. And it deserves real protection.