FIU-IND Imposes ₹9.27 Crore Penalty on Bybit for Violating PMLA Regulations

Bybit Faces Severe Penalty for Non-Compliance with Anti-Money Laundering Rules and Lack of Registration as Virtual Digital Asset Service Provider.

The Financial Intelligence Unit-India (FIU-IND) has imposed a hefty monetary penalty of ₹9.27 crore on Bybit Fintech Limited (Bybit), a Virtual Digital Asset Service Provider (VDA SP), for violations of its obligations under the Prevention of Money Laundering Act, 2002 (PMLA) and related regulations. This decision, announced on January 31, 2025, follows a comprehensive investigation into Bybit’s non-compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) guidelines, as well as the Prevention of Money Laundering (Maintenance of Records) Rules, 2005.

Bybit, which operates in the rapidly growing digital asset sector, was found to have expanded its services in India without securing the necessary registration with FIU-IND as a reporting entity. According to Section 2(1)(wa) of the PMLA, any Virtual Digital Asset Service Provider (VDA SP) is required to be classified as a 'reporting entity,' which mandates adherence to strict AML and CFT protocols. Bybit’s continuous non-compliance in this regard led to the authorities taking stern action.

Shri Vivek Aggarwal, the Director of FIU-IND, conducted a detailed review of both written and oral submissions made by Bybit and concluded that the company had violated several provisions under the PMLA and its associated rules. These violations included failure to adhere to registration requirements under Section 12(1) of the PMLA, and non-compliance with several critical rules including Rule 2(1)(h), Rule 7(2), Rule 8(2), Rule 8(4), and Rule 3(1)(D) of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005.

As a result of these violations, FIU-IND decided to block Bybit’s websites and operations under the Information Technology Act, 2000, through the Ministry of Electronics and Information Technology (MEITY). This was done to curb the continued unlawful operations of the platform in India.

In addition to this, the FIU-IND had previously issued comprehensive guidelines on March 10, 2023, aimed at regulating Virtual Digital Asset Service Providers, requiring them to comply with stringent Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) standards. Furthermore, a circular issued on October 17, 2023, specifically detailed the process for the registration of VDA SPs as reporting entities, making clear the necessity for such registration to ensure lawful operation within India.

The penalty imposed on Bybit follows a series of actions and investigations taken by FIU-IND to reinforce its regulatory framework for virtual digital asset services in India. The government has been increasingly focused on tightening regulations for the digital asset sector, with the aim of preventing illegal financial activities and ensuring that such services comply with established financial and anti-money laundering standards.

With the ₹9.27 crore penalty, Bybit now faces significant financial consequences for its actions, which could serve as a deterrent to other Virtual Digital Asset Service Providers operating without the required licenses and registrations. This penalty reflects the Indian government's commitment to ensuring compliance with financial regulations in the rapidly expanding digital asset sector.

The FIU-IND’s decision underscores its commitment to safeguarding the financial system from illicit activities, including money laundering and terrorist financing, and further demonstrates the growing regulatory scrutiny on the virtual digital assets space in India.