The ED has launched investigations into alleged violations of the Foreign Exchange Management Act (FEMA) involving two crypto platforms and decentralised finance protocol
This is the second such investigation that the agency has revealed in recent months. In June, the ED searched premises linked to five Bengaluru-based platforms, over alleged unauthorised cross-border crypto transfers
ED’s Bengaluru Zonal Office conducted searches at three premises in Bengaluru and one in Madhya Pradesh on October 27 under Section 37 of FEMA, 1999
The Enforcement Directorate (ED) has launched investigations into alleged violations of the Foreign Exchange Management Act (FEMA) involving crypto platforms Mudrex and Saber.money, as well as decentralised finance (DeFi) protocol Instadapp and its associated platform Fluid, over alleged unauthorised cross-border fund transfers worth more than ₹4,940 Cr.
The agency said its Bengaluru Zonal Office conducted searches at three premises in Bengaluru and one in Madhya Pradesh on October 27 under Section 37 of FEMA, 1999.
The investigations centre on the alleged use of cryptocurrencies, particularly stablecoins such as USDT and USDC, to facilitate cross-border money transfers outside authorised channels.
The ED said its preliminary investigation into the Mudrex and Saber.money operations indicated alleged FEMA violations exceeding ₹4,600 Cr. Separately, the agency alleged contraventions amounting to approximately $40 Mn (around ₹380.6 Cr) in the Instadapp/Fluid case.
ED Flags Alleged Unauthorised Transfers Through Crypto Platforms
The Enforcement Directorate (ED) has searched four premises in Bengaluru and Madhya Pradesh as part of an investigation into alleged unauthorised cross-border financial transactions involving cryptocurrency worth more than ₹5,000 Cr.
The agency’s Bengaluru Zonal Office conducted the searches earlier this week on October 27 under the FEMA regulations. In a post on X, the ED said its probe had uncovered the alleged use of shell entities in tax-haven jurisdictions, large over-the-counter (OTC) transactions and foreign payouts through cryptocurrency platforms such as Binance and Bybit. <
It has identified Bengaluru-based RPFAS Technologies Pvt Ltd, which operates platforms Mudrex and Saber.money, among the entities which allegedly use crypto currencies for unauthorised cross border transactions and trading.
“The entity is openly advertising instant money transfer across borders using cryptocurrencies despite not being authorised with RBI,” the agency said.
The platforms also allegedly offered crypto on-ramp and off-ramp services, allowing users to convert traditional currencies such as INR, USD and EUR into digital assets and subsequently withdraw the proceeds into bank accounts.
The ED alleged that these services were used to facilitate cross-border transfers through stablecoins, bypassing authorised channels for international remittances.
In a separate investigation, the ED examined Instadapp, a DeFi protocol deployed on the Ethereum blockchain, and its associated platform Fluid. Instadapp provides tools for decentralised finance activities, including lending, borrowing and swapping crypto assets through smart contracts.
The ED alleged that entities associated with the protocol were incorporated in foreign jurisdictions but managed from India. These entities were reportedly registered across jurisdictions including the US, Singapore, the British Virgin Islands and Dubai.
According to the agency, searches and preliminary investigations indicated that some of these entities did not have physical offices or employees at their registered addresses, while their operations were allegedly managed from India.
The ED further alleged that funds received from overseas investors were routed through foreign bank accounts and subsequently transferred to India to meet expenses and other payments.
This is the second such investigation that the agency has revealed in recent months. In June, the ED searched six premises linked to five Bengaluru-based platforms — Transak, Carret, Xpat, Onramp.money and Onmeta — over alleged unauthorised cross-border crypto transfers.
The agency froze bank accounts holding around ₹6 Cr, alleging the platforms circumvented FEMA by using stablecoins to route remittances outside authorised channels. It said the entities lacked RBI authorisation for such transfers and operated through foreign-registered entities controlled from India.
It is pertinent to note that cryptocurrencies remain unregulated in India, while also attracting a 30% capital gains tax and 1% TDS on every transaction.
Authorities continue to flag risks in the ecosystem, with the parliamentary standing committee on finance last month classifying the asset class as “high risk” citing rampant money laundering, trafficking, radicalisation and suspicious crypto transaction.