The Latest ED Probe Highlights the Growing Compliance Challenges Facing Crypto Platforms
The Enforcement Directorate has identified alleged FEMA violations exceeding ₹2,500 crore during a probe into crypto-linked cross-border transfers involving several Bengaluru-based firms. The investigation focuses on virtual digital asset transactions, compliance lapses and potential misuse of crypto infrastructure for international fund movement.
How the Alleged Rs. 2,500-Crore Crypto Transfer Network Operated
The agency said the entities offered ‘on-ramp’ and ‘off-ramp’ services, which allowed users to convert conventional currencies into crypto assets and vice versa. Investigators alleged that customers deposited funds into company accounts, which were then used to purchase stablecoins. The digital assets were subsequently sold through crypto exchanges, with the proceeds transferred to recipients.
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 authorization from the Reserve Bank of India (RBI).
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.
Why FEMA Compliance is Critical for Crypto Platforms
The ED stated that none of the entities under investigation was 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 US 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 US 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.
Also Read: ED Adds 87 Accused in HPZ Token Scam, Total Reaches 437 in Rs 2,200 Crore Case
What the Investigation Means for India’s Digital Asset Ecosystem
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 Rs. 6 crore have been placed under restraint, and further investigation is underway, it added.
The ED’s investigation signals that regulatory compliance is becoming a defining factor for India’s crypto industry. As authorities tighten oversight of cross-border digital asset transactions, platforms may need stronger governance, transparency and reporting frameworks to maintain growth while meeting evolving regulatory expectations.
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