The State Investigation Agency (SIA) of Jammu and Kashmir has uncovered a cross-border terror financing module involving the use of cryptocurrency to fund terrorist activities in the Union Territory. The module is reportedly being operated by terror mentors based across the border.
This is the second time in three years that the SIA has busted such a module. Earlier, in August 2022, the agency had uncovered a similar network using Bitcoin to push illicit funds into Jammu and Kashmir, marking the first time that the agency had established the use of cryptocurrency for terror financing in the region.
The SIA on Friday conducted simultaneous search operations at three suspected locations in Jammu, Doda, and Handwara, targeting individuals and networks suspected of involvement in crypto-based terror financing and other anti-national activities.
The coordinated raids were conducted as part of an ongoing investigation registered under FIR No. 12/2022 at Police Station CI-SIA Kashmir. The case relates to a broader conspiracy involving cross-border cryptocurrency funding aimed at promoting terrorism and inciting unrest in Jammu and Kashmir.
The investigation is being carried out under multiple stringent legal provisions, including Sections 18, 38, and 39 of the Unlawful Activities (Prevention) Act (UAPA) and Sections 120B, 121, and 121A of the Indian Penal Code (IPC), which deal with criminal conspiracy, waging war against the State, and aiding terrorism.
Officials confirmed that electronic devices and incriminating material recovered during the searches are expected to provide crucial leads in identifying co-conspirators and handlers involved in this evolving financial network. Investigators believe the proceeds of these cryptocurrency transactions were being used to support terror groups, as well as to radicalize and recruit youth for disrupting peace and stability in the region.
Authorities now confirm that terror operatives based in Pakistan have diversified their funding tactics by adopting virtual currencies, thereby bypassing traditional surveillance mechanisms and banking regulations.
A senior SIA official stated that the agency remains committed to dismantling sophisticated terror financing mechanisms, including those leveraging emerging digital platforms.
"We remain steadfast in our resolve to uproot terrorism and its support structures. These new-age financial tools like cryptocurrency are being increasingly exploited by enemy forces, but our agencies are fully equipped to track and dismantle such methods," the official said.
The searches also focused on individuals suspected of inciting violence and provoking youth against the Union of India, posing a serious threat to national security.
Similar Module Busted in August 2022
In August 2022, the SIA had busted a gang using Bitcoin channels to push illegitimate money into the Union Territory. The case was registered under FIR No. 12/22 under Sections 18, 38, and 39 of the UAPA, and Sections 120B, 121, and 121A of the IPC at the Counter-Intelligence (CI) Police Station in Srinagar.
Searches were conducted at the residences and premises of suspects in Mendhar and Poonch (Jammu province) and in Baramulla, Kupwara, and Handwara (Kashmir division).
Preliminary investigations at the time revealed that the dirty money originated from Pakistan and had reached these individuals through a complex layering process, designed to prevent backward tracing of its origin.
Several of the intermediary accounts used to layer the transactions were found to be located outside Jammu and Kashmir, while the final conversion and integration of the Pakistani money was allegedly carried out by exploiting loopholes in the international Bitcoin trade.
