Crypto Scams Surge in India: Karnataka CID Report Reveals ₹29.15 Billion Losses

- Regulatory gaps fueling rise in cybercrime, says Karnataka CID. - Over ₹29.15 billion ($349 million) lost to cybercrime in 2024, a fourfold year-over-year increase. On June 28, 2025, the *Indian Express* reported on a new study from the Criminal Investigation Department (CID) in Karnataka, India. The report, titled "A Study on the Use of Money Mules in Cyber Crimes," identifies regulatory gaps as the primary reason for a surge in cryptocurrency scams. It highlights how a lack of oversight in the crypto market allows criminals to exploit money mules and other channels to launder stolen funds, and these activities pose substantial challenges for law enforcement. The CID's Center for Cybercrime Investigation Training and Research outlined several methods criminals use to hide illegal transactions. According to the report, criminals often convert laundered money into cryptocurrency using money mules or peer-to-peer (P2P) networks that involve genuine crypto traders. Additionally, online casinos with lenient Know Your Customer (KYC) requirements make investigations more difficult by enabling the seamless laundering of illicit funds. The report revealed that in 2024, Karnataka recorded approximately ₹29.15 billion ($349 million) in losses from cybercrimes, a significant increase from previous years. In addition, the CID criticized banks for failing to consistently report large, suspicious transactions, attributing this failure to negligence and, in rare cases, collusion. The report also noted that lax enforcement of strict account verification makes accounts more vulnerable; for instance, failing to safeguard phone number changes linked to bank accounts leaves them open to fraudsters. The findings underscore an urgent need for enhanced regulatory frameworks in the cryptocurrency sector. These frameworks are necessary to combat rising cybercrimes and protect citizens from financial exploitation.