India's ED conducts searches in $524 million cryptocurrency foreign exchange violation probe

India's Enforcement Directorate conducted searches across Karnataka and Madhya Pradesh targeting entities associated with cryptocurrency platforms Mudrex, Saber.money, and Instadapp over alleged foreign exchange violations exceeding $525 million (₹5,000 crore). Authorities allege the platforms facilitated unauthorized cross-border transfers using stablecoins like USDT and USDC to bypass Reserve Bank of India rules and standard banking channels. The probe highlighted the misuse of shell entities in jurisdictions including Canada, Delaware, Lithuania, and Singapore to mask transactions.

General crypto FEMA investigation details

• ▪India's Enforcement Directorate conducted searches under Section 37 of the Foreign Exchange Management Act at three locations in Bengaluru and one in Madhya Pradesh in late October 2026.
• ▪The Enforcement Directorate alleged that unauthorized cross-border payment systems misused USDT and USDC stablecoins to bypass authorized banking channels and pay expenses in foreign countries.
• ▪The Enforcement Directorate's preliminary investigation revealed large-volume over-the-counter cryptocurrency deals involving shell entities incorporated in Canada, Lithuania, the United States, and tax havens.
• ▪The Enforcement Directorate named cryptocurrency exchanges Binance and Bybit as platforms used for alleged foreign payouts and holdings, without announcing charges or penalties against either exchange.
• ▪The Enforcement Directorate's investigation involves alleged unauthorized cross-border cryptocurrency remittances and foreign exchange violations totaling over ₹5,000 crore, or approximately $525 million.

Investigation into Mudrex and Saber.money

• ▪Enforcement Directorate preliminary findings indicate that unauthorized cross-border transfers and crypto balances on foreign platforms linked to Mudrex and Saber.money exceeded ₹4,600 crore.
• ▪According to the Enforcement Directorate, Saber.money advertised stablecoin payment infrastructure for Asia and transfers taking 0.2 seconds compared to 30 hours for traditional banking transfers.
• ▪The Enforcement Directorate alleged that RPFAS Technologies Private Limited advertised instant cross-border money transfers using cryptocurrencies without receiving required authorization from the Reserve Bank of India.
• ▪The Enforcement Directorate alleged that customers deposited money into company bank accounts to purchase virtual digital assets, particularly USDT, which were sold on Indian crypto exchanges to pay recipients.
• ▪The Enforcement Directorate initiated its investigation into RPFAS Technologies Private Limited following complaints alleging large-scale Foreign Exchange Management Act violations by its platforms Mudrex and Saber.money.

Mudrex compliance disclosures

• ▪Mudrex's public compliance page displays registration with India's Financial Intelligence Unit under the Prevention of Money Laundering Act as RPFAS Technologies Private Limited with registration number VA00031079.
• ▪Mudrex's public compliance page did not present a response to the Enforcement Directorate's October 29, 2026 allegations.

FEMA violations by Instadapp protocol

• ▪The Enforcement Directorate identified offshore entities associated with Instadapp in Delaware, the British Virgin Islands, Singapore, and Dubai, alleging they lacked offices or employees at their registered locations.
• ▪The Enforcement Directorate alleged that Instadapp's protocol revenue and investor funding were received as stablecoins in multisignature wallets controlled from India by British Virgin Islands entity Interop Labs Ltd.
• ▪The Enforcement Directorate reported that stablecoins converted through Independent Reserve Singapore and QCP Capital Singapore entered bank accounts of Singapore group companies and were remitted to India as bogus software fees.
• ▪The Enforcement Directorate alleged that decentralized finance protocol Instadapp engaged in Foreign Exchange Management Act contraventions involving approximately $40 million, or about ₹380 crore.
• ▪The Enforcement Directorate stated that although Instadapp was presented as operated by a Delaware entity, founder Sowmay Jain and the development team managed operations from India.