Blab Crypto
Indias Enforcement Directorate Seeks to Curb 2,500-Crore Crypto Cross-Border Transfers
On Friday, the Enforcement Directorate (ED) announced a formal investigation under the Foreign Exchange Management Act (FEMA) targeting five Bengaluru‑based firms accused of facilitating cross‑border money transfers via virtual digital assets (VDAs) without Reserve Bank of India (RBI) approval.
The probe follows searches carried out on 17 June at six premises in Karnataka’s capital. The companies named by the ED are Transak (Transak Technology India), Carret (Carretx Technologies), Xpat – formerly Remit2any (Mokshagna Technologies), Onramp.money (Buyhatke Internet), and Onmeta (Abhibha Technologies). According to the agency, the firms promoted instant or “fastest” crypto‑to‑fiat and fiat‑to‑crypto services for global transfers, a practice that the ED says is prohibited without RBI authorization.
Preliminary findings indicate that the firms conducted large‑volume over‑the‑counter (OTC) transactions on India‑based crypto trading platforms, used shell entities incorporated in known tax havens, and routed funds through foreign‑based exchanges to move money abroad. The cumulative value of the alleged unauthorized transfers is reported to exceed ₹2,500 crore. In response, the ED placed restraint orders on bank accounts belonging to the companies, which held a combined balance of roughly ₹6 crore.
FEMA, which replaced the Foreign Exchange Regulation Act in 1999, regulates all foreign exchange transactions by Indian residents and entities. Under its provisions, any cross‑border transfer must be conducted through a payment system operator that has received explicit authorization from the RBI. The ED’s statement notes that the firms in question were “unauthorised payment system operators” and that their advertising of instant cross‑border transfers constituted a clear violation of FEMA.
The investigation is part of a broader regulatory push against crypto‑based payment services that have emerged in India in recent years. The RBI has repeatedly warned that non‑bank payment system operators (PSOs) must obtain a licence before offering on‑ramp or off‑ramp services. In 2024, the RBI issued new licensing rules and cyber‑resilience guidelines for PSOs, underscoring the importance of compliance.
While the ED’s probe is focused on FEMA contraventions, it does not preclude future actions under the Prevention of Money Laundering Act (PMLA). The agency’s statement did not mention any PMLA charges, and no formal notice has yet been issued to the firms.
Industry observers note that the alleged use of shell entities and foreign exchanges raises concerns about potential money‑laundering risks. The ED’s restraint orders on bank accounts are intended to preserve assets that may be linked to the alleged violations.
The investigation remains in its early stages. The ED has not released any further details about the scope of the search, the specific transactions under review, or the timeline for filing charges. The companies have not yet issued a public response.
As the probe continues, stakeholders in the Indian crypto market will be watching for any regulatory clarifications or enforcement actions that may affect the broader ecosystem. The outcome of the investigation could influence how payment service operators structure their cross‑border operations and whether additional regulatory safeguards are introduced.
In summary, the ED’s action signals a tightening of oversight over crypto‑based cross‑border payments in India. The investigation into the five Bengaluru firms is ongoing, with preliminary findings pointing to a ₹2,500 crore violation of FEMA. The agencies involved are likely to pursue further legal steps as more evidence is gathered.
The probe follows searches carried out on 17 June at six premises in Karnataka’s capital. The companies named by the ED are Transak (Transak Technology India), Carret (Carretx Technologies), Xpat – formerly Remit2any (Mokshagna Technologies), Onramp.money (Buyhatke Internet), and Onmeta (Abhibha Technologies). According to the agency, the firms promoted instant or “fastest” crypto‑to‑fiat and fiat‑to‑crypto services for global transfers, a practice that the ED says is prohibited without RBI authorization.
Preliminary findings indicate that the firms conducted large‑volume over‑the‑counter (OTC) transactions on India‑based crypto trading platforms, used shell entities incorporated in known tax havens, and routed funds through foreign‑based exchanges to move money abroad. The cumulative value of the alleged unauthorized transfers is reported to exceed ₹2,500 crore. In response, the ED placed restraint orders on bank accounts belonging to the companies, which held a combined balance of roughly ₹6 crore.
FEMA, which replaced the Foreign Exchange Regulation Act in 1999, regulates all foreign exchange transactions by Indian residents and entities. Under its provisions, any cross‑border transfer must be conducted through a payment system operator that has received explicit authorization from the RBI. The ED’s statement notes that the firms in question were “unauthorised payment system operators” and that their advertising of instant cross‑border transfers constituted a clear violation of FEMA.
The investigation is part of a broader regulatory push against crypto‑based payment services that have emerged in India in recent years. The RBI has repeatedly warned that non‑bank payment system operators (PSOs) must obtain a licence before offering on‑ramp or off‑ramp services. In 2024, the RBI issued new licensing rules and cyber‑resilience guidelines for PSOs, underscoring the importance of compliance.
While the ED’s probe is focused on FEMA contraventions, it does not preclude future actions under the Prevention of Money Laundering Act (PMLA). The agency’s statement did not mention any PMLA charges, and no formal notice has yet been issued to the firms.
Industry observers note that the alleged use of shell entities and foreign exchanges raises concerns about potential money‑laundering risks. The ED’s restraint orders on bank accounts are intended to preserve assets that may be linked to the alleged violations.
The investigation remains in its early stages. The ED has not released any further details about the scope of the search, the specific transactions under review, or the timeline for filing charges. The companies have not yet issued a public response.
As the probe continues, stakeholders in the Indian crypto market will be watching for any regulatory clarifications or enforcement actions that may affect the broader ecosystem. The outcome of the investigation could influence how payment service operators structure their cross‑border operations and whether additional regulatory safeguards are introduced.
In summary, the ED’s action signals a tightening of oversight over crypto‑based cross‑border payments in India. The investigation into the five Bengaluru firms is ongoing, with preliminary findings pointing to a ₹2,500 crore violation of FEMA. The agencies involved are likely to pursue further legal steps as more evidence is gathered.
