India’s ED raids five crypto firms over illegal money transfers
Bank accounts holding approximately ₹6 crore have been placed under restraint, while the investigation is continuing.
India’s Enforcement Directorate (ED) has alleged that several Bengaluru-based crypto firms used virtual digital assets (VDAs) to facilitate unauthorized cross-border transfer of funds through crypto on-ramp and off-ramp service providers operating without approval from the Reserve Bank of India (RBI).
According to a media release issued on June 19, the entities enabled customers to convert fiat currency into crypto assets, predominantly stablecoins such as USDT, and subsequently liquidate those assets through Indian crypto exchanges. The resulting sale proceeds were transferred to intended beneficiaries in India.
Evidence gathered during search operations and statements recorded under the Foreign Exchange Management Act (FEMA), 1999, indicated that customers deposited funds into company bank accounts, which were then used to purchase VDAs. Investigators alleged that the entities failed to comply with RBI-prescribed remittance requirements, including purpose codes and Foreign Inward Remittance Certificates (FIRCs), and instead routed transactions through related overseas entities while operating from India.
The investigation identified separate instances involving M/s Mokshagna Technologies Pvt. Ltd., M/s Transak Technology Pvt. Ltd. and M/s Carretx Technologies Pvt. Ltd. In each case, investigators alleged that VDAs, OTC crypto transactions and related overseas entities were used to facilitate the unauthorized movement of funds across borders.
The entities allegedly undertook inward and outward transfers through crypto trading platforms and foreign affiliates despite not being authorised to carry out cross-border remittance activities.
Investigators also reported the use of shell companies in tax havens, foreign crypto exchanges and large OTC transactions as part of the alleged remittance network.
Preliminary findings suggest suspected contraventions of FEMA involving transactions exceeding ₹2,500 crore. Restraint orders have been issued on bank accounts with balances of around ₹6 crore, and the investigation remains ongoing.