The Enforcement Directorate (ED) has launched a probe into five Bengaluru-based crypto platforms, conducting simultaneous searches and freezing bank accounts worth ₹6 crore over suspected violations of foreign exchange laws involving cross-border transfers via cryptocurrencies.
- ED raids five Bengaluru crypto firms for unauthorized cross-border transfers
- ₹6 crore frozen amid allegations of FEMA violations using cryptocurrencies
- Platforms operated without RBI approval, bypassing legal forex channels
What happened
On June 17, the Enforcement Directorate conducted searches at six premises linked to five Bengaluru-based crypto-related platforms including Web3 payments provider Transak, trading platform Carret, remittance startup Xpat, cashback provider BuyHatke, and Onmeta parent Abhibha Technologies. The raids were part of an ongoing investigation into alleged large-scale unauthorized cross-border money transfers using virtual digital assets (VDAs).
During the searches, the ED placed restraint orders on bank accounts with balances totaling approximately ₹6 crore. These accounts are tied to the entities suspected of breaching provisions under the Foreign Exchange Management Act (FEMA) by facilitating overseas payments without proper authorization or compliance with RBI regulations.
Why it matters
The investigation highlights continued regulatory scrutiny of the crypto sector in India, particularly concerning the use of cryptocurrencies for cross-border remittances—a space currently lacking clear legal authorization. None of the entities probed were authorized by the Reserve Bank of India to conduct cross-border payments through digital assets, raising concerns over circumvention of legal channels.
This case underscores ongoing challenges in regulating emerging financial technologies like virtual digital assets amid India's complex forex laws. The use of related foreign entities to sidestep restrictions poses systemic risks including potential money laundering and tax evasion, fueling government efforts to tighten oversight amid rising crypto adoption.
What to watch next
Additionally, the operational models and compliance gaps of entities like Onmeta, which reportedly managed USD to crypto conversions and transfers controlled by individuals in the US and India, may feature prominently in future regulatory directives. The case may influence India's evolving tax and AML frameworks for cryptocurrencies as lawmakers seek to address the risks flagged by the parliamentary finance committee.