The Directorate of Enforcement (ED) has carried out searches at six locations in Bengaluru as part of an investigation into alleged large-scale violations of the Foreign Exchange Management Act (FEMA), 1999, involving cross-border money transfers through Virtual Digital Assets (VDAs).
The searches were conducted on June 17 under Section 37 of FEMA and covered five companies operating crypto payment and remittance platforms: Transak Technology India Pvt Ltd (Transak), Carretx Technologies Pvt Ltd (Carret), Mokshagna Technologies Pvt Ltd (Xpat, formerly Remit2any), Buyhatke Internet Pvt Ltd (Onramp.money) and Abhibha Technologies Pvt Ltd (Onmeta).
According to the ED, the investigation was initiated following a complaint alleging that Bengaluru-based entities were facilitating unauthorised international money transfers using cryptocurrencies while operating outside the Reserve Bank of India's regulatory framework.
The agency said intelligence gathered during the probe pointed to widespread circumvention of FEMA regulations by payment operators offering crypto-based remittance services. These platforms allegedly advertise instant cross-border money transfers through cryptocurrencies, allowing users to convert fiat currencies such as the Indian Rupee or US Dollar into virtual digital assets like Bitcoin and stablecoins including USDT.
Officials said the companies provide both "on-ramp" services, which convert conventional currency into crypto assets, and "off-ramp" services, which allow users to sell crypto and receive funds in bank accounts.
The ED said its investigation has revealed a common modus operandi. Customers register on these platforms and deposit money into company bank accounts. The funds are then used to purchase virtual digital assets, particularly stablecoins such as USDT. These assets are subsequently sold through Indian crypto exchanges, and the proceeds are transferred to beneficiaries. In some cases, recipients are also able to claim Tax Deducted at Source (TDS) on the transactions.
The agency alleged that none of the entities offering these cross-border transfer services are authorised by the RBI. They also allegedly bypass mandatory compliance requirements such as purpose codes and Foreign Inward Remittance Certificates (FIRC) while routing transactions through related entities incorporated in foreign jurisdictions but controlled from India.
In the case of Mokshagna Technologies Pvt Ltd, investigators found that money collected from customers in the United States was converted into virtual digital assets and transferred to India-based crypto trading platforms. The assets were then sold through high-volume over-the-counter (OTC) deals, and the proceeds credited to the company's bank accounts before being distributed to recipients in India. The ED claimed the operation was controlled by a person residing in the US with assistance from family members based in India.
The agency also alleged that Transak Technology India Pvt Ltd offered off-ramp services without RBI authorisation. According to the ED, funds deposited in India were converted into virtual digital assets, sold and the proceeds withdrawn outside the country. The company allegedly transferred operational profits to its related entity, Transak Inc USA, by converting those profits into virtual digital assets and moving them to crypto wallets linked to the US entity.
In another case, Carretx Technologies Pvt Ltd, through its mobile application "Carret", allegedly enabled retail users to trade cryptocurrencies by accepting Indian Rupees in company accounts and crediting equivalent crypto assets to users' wallets. Customers could later sell these assets and receive money in their bank accounts. The ED alleged that the company conducted OTC transactions with foreign remittance applications to facilitate unauthorised money transfers into India.
During the searches, investigators found evidence of large-volume OTC crypto deals, the use of shell companies incorporated in tax havens and transactions routed through foreign crypto trading platforms to enable unauthorised cross-border fund transfers.
The ED's preliminary findings indicate suspected FEMA violations involving unauthorised cross-border transfers exceeding Rs 2,500 crore. As part of the action, restraint orders have been imposed on bank accounts of some of the entities, freezing balances of around Rs 6 crore allegedly linked to the transactions.
Further investigation is underway.
