ED detects ₹2,500-crore FEMA violations in Bengaluru cross-border crypto transfers probe
The Directorate of Enforcement (ED) has detected alleged violations of the Foreign Exchange Management Act (FEMA) involving more than ₹2,500 crore after conducting searches on
The Directorate of Enforcement (ED) has detected alleged violations of the Foreign Exchange Management Act (FEMA) involving more than ₹2,500 crore after conducting searches on six premises in Bengaluru linked to cryptocurrency-based cross-border money transfers. The searches were carried out on June 17 under Section 37 of FEMA at the offices of Transak Technology India Pvt. Ltd. (Transak), Carretx Technologies Pvt. Ltd. (Carret), Mokshagna Technologies Pvt. Ltd., Buyhatke Internet Pvt. Ltd., and Abhibha Technologies Pvt. Ltd. According to the ED, the investigation was initiated following a complaint alleging large-scale FEMA violations by Bengaluru-based entities using Virtual Digital Assets (VDAs) for cross-border transactions.
Preliminary findings indicate that several firms were facilitating international money transfers through cryptocurrencies without authorisation from the Reserve Bank of India (RBI). The agency said the entities offered “on-ramp” and “off-ramp” services, enabling users to convert conventional currencies into crypto assets and vice versa. Investigators alleged that customers deposited money into company accounts, which was then used to purchase stablecoins. The digital assets were subsequently sold through crypto exchanges, with the proceeds transferred to recipients. The ED stated that none of the entities under investigation were authorised by the RBI to undertake cross-border remittances.
They were not complying with regulatory requirements such as purpose codes and Foreign Inward Remittance Certificates (FIRCs). The ED also alleged that some firms operated through related entities abroad to bypass official remittance channels. In the case of Mokshagna Technologies, the ED reportedly found that funds collected from customers in the U.S. were converted into crypto assets and transferred to Indian crypto trading platforms. The proceeds were then distributed to beneficiaries in India. The ED alleged that the operation was controlled by one person residing in the U.S. with support from family members in India.
The agency also alleged that Transak transferred operational profits to a related U.S.-based entity using virtual digital assets, while Carret facilitated crypto trading and undertook over-the-counter transactions with foreign remittance applications. Searches revealed shell companies in tax havens and foreign crypto platforms for unauthorised money transfers, the ED said in a statement. Bank accounts holding around ₹6 crore have been placed under restraint, and further investigation is under way, it added.
The BriefWire