ED Probes Alleged ₹5,000 Crore Crypto Transactions; Searches Bengaluru and Madhya Pradesh

NEW DELHI: The Enforcement Directorate (ED) has launched an investigation into alleged unauthorised cross border financial transactions worth approximately ₹5,000 crore involving cryptocurrency platforms and decentralised finance businesses.

The agency’s Bengaluru Zonal Office conducted searches at four premises on October 27, 2026, including three locations in Bengaluru, Karnataka and one in Madhya Pradesh.

The searches were conducted under Section 37 of the Foreign Exchange Management Act (FEMA), 1999, following complaints and intelligence inputs concerning suspected violations of foreign exchange regulations.

According to the ED, the investigation concerns the alleged use of cryptocurrencies, particularly stablecoins such as USDT and USDC, to transfer money across international borders without using authorised remittance channels.

1. Mudrex and Saber.money Under Investigation

The investigation involves Bengaluru based RPFAS Technologies Private Limited, which operates two cryptocurrency related platforms, Mudrex and Saber.money.

The ED alleges that these platforms advertised instant international money transfers using cryptocurrencies despite lacking the required authorisation from the Reserve Bank of India (RBI) to operate such payment services.

According to the agency’s preliminary findings:

The agency has also identified alleged large scale over the counter (OTC) cryptocurrency transactions and foreign entities incorporated in jurisdictions including Canada, Lithuania and the United States.

The ED’s preliminary estimate indicates more than ₹4,600 crore in alleged unauthorised cross-border transfers and cryptocurrency balances held on foreign platforms.

2. Instadapp and Fluid Also Under ED Scanner

The investigation has also covered Instadapp, a decentralised finance (DeFi) protocol built on the Ethereum blockchain. Its associated platform operates under the name Fluid.

DeFi platforms use blockchain technology and automated computer programmes called smart contracts to provide financial services such as cryptocurrency lending, borrowing and token exchanges.

The ED alleges that although the business was presented as operating through a company registered in the United States, its founder and development team were managing operations from India.

The agency is examining alleged financial arrangements involving companies registered in:

According to the ED, cryptocurrency revenues and investor funds were allegedly received through overseas digital wallets and converted into conventional currencies through foreign exchanges.

The agency further alleges that some funds were transferred to India as payments for software development and consultancy services that it suspects were not genuine.

The preliminary estimate of alleged FEMA violations connected with Instadapp is approximately US$40 million (around ₹380 crore).

The investigation is continuing to establish the actual nature of these transactions and the responsibilities of the entities involved.

3. Binance and Bybit Mentioned in Investigation

• The ED has also identified international cryptocurrency exchanges, including Binance and Bybit, in connection with transactions being examined.
• The agency is investigating whether foreign cryptocurrency platforms and overseas entities were used to facilitate transfers outside authorised financial channels.
• However, being mentioned in the investigation does not establish wrongdoing by these exchanges. The ED has not announced a finding of guilt against Binance or Bybit in this case.

4. What Is FEMA and Why Is the ED Investigating?

• The Foreign Exchange Management Act, 1999 (FEMA), regulates foreign exchange transactions and cross border financial activities in India.
• Its purpose includes regulating foreign exchange transactions and ensuring that international money transfers comply with applicable laws.
• Under the regulatory framework, certain payment and remittance activities require appropriate authorisation.
• The ED is examining whether cryptocurrency was allegedly used to move money internationally without following the required regulatory procedures.

What are stablecoins?

Stablecoins are digital currencies designed to maintain a relatively stable value by being linked to an underlying asset, commonly the US dollar.

Examples include:

These digital assets can be transferred through blockchain networks. However, their use does not automatically exempt transactions from Indian foreign exchange regulations.

5. Why This Investigation Matters

The case raises important questions about:

The investigation also highlights the challenges faced by financial regulators in monitoring transactions conducted through decentralised digital platforms.

6. What Happens Next?

• The ED is continuing its investigation to establish the complete transaction trail, identify the entities involved and determine whether FEMA provisions were violated.
• The agency’s findings are preliminary. The allegations have not yet been established through a final adjudication or court conviction.
• The searches were conducted on October 27, and the ED’s findings were reported on October 29, 2026. The reports reviewed do not announce arrests in this particular operation.

Important Facts at a Glance

Source: Enforcement Directorate statements and media reports dated October 29-30, 2026.

Business Galaxy – Editorial Note: The investigation is ongoing. All allegations should be treated as allegations until established through the appropriate legal process.