India’s Enforcement Directorate Probes Crypto Firms for Illegal Transfers

India’s Enforcement Directorate (ED) has launched an investigation into several cryptocurrency platforms over alleged violations of the Foreign Exchange Management Act (FEMA). The agency is examining unauthorised cross-border fund transfers totaling more than ₹4,940 crore.

October 27

The ED’s Bengaluru Zonal Office conducted searches at four premises, including three in Bengaluru and one in Madhya Pradesh. The agency acted under Section 37 of FEMA, 1999, to investigate the use of stablecoins, such as USDT and USDC, to facilitate international money transfers outside of authorized banking channels.

The Investigations

The agency identified Bengaluru-based RPFAS Technologies Pvt Ltd, which operates the Mudrex and Saber.money platforms, as a primary focus. The ED alleges that these platforms facilitated cross-border transfers by bypassing the Reserve Bank of India’s authorized channels. According to the agency, RPFAS Technologies advertised instant money transfers using cryptocurrencies despite lacking regulatory approval. Investigators reported that the platforms offered on-ramp and off-ramp services, converting traditional currencies like INR, USD, and EUR into digital assets for subsequent withdrawal.

In a separate probe, the ED targeted the decentralized finance (DeFi) protocol Instadapp and its associated platform, Fluid. The agency alleges that entities linked to this protocol were managed from India but incorporated in foreign jurisdictions, including the US and Singapore. The ED claims these operations involved shell entities in tax havens, large over-the-counter transactions, and payouts via exchanges like Binance and Bybit.

Current Status

The ED reports that preliminary investigations into Mudrex and Saber.money indicate FEMA violations exceeding ₹4,600 crore. The separate case involving Instadapp and Fluid involves alleged contraventions of approximately $40 million, or roughly ₹380.6 crore. The investigation is ongoing.