Source-led article
ED Raids Five Bengaluru Crypto Platforms Over Alleged Illegal Cross-Border Transfers
The Enforcement Directorate (ED) conducted searches at six premises linked to five Bengaluru-based Web3 platforms on June 17, as part of an investigation into alleged unauthorised cross-border money transfers using cryptocurrencies. The agency has frozen bank accounts holding approximately ₹6 crore in connection with these probes.
The platforms under scrutiny include Web3 payments platform Transak, crypto trading platform Carret, remittance startup Xpat (formerly Remit2Any), cashback and coupon platform BuyHatke (also linked to Onramp.money), and Onmeta’s parent company, Abhibha Technologies Pvt. Ltd. The ED stated that its investigation revealed that none of these entities were authorised by the Reserve Bank of India (RBI) to offer cross-border payment services via Virtual Digital Assets (VDAs).
Investigation Details and Allegations
The ED’s probe was initiated following a complaint alleging “large scale” violations of foreign exchange norms by these companies. Subsequent enquiries and intelligence gathering by the ED reportedly uncovered extensive circumvention of the Foreign Exchange Management Act (FEMA) through the use of VDAs for cross-border payments.
According to the ED, these entities failed to comply with regulations such as purpose codes and Asset Reconstruction Company (ARC) mandates, which are required by the RBI for inward and outward remittances. The agency also highlighted that many of these platforms are believed to be bypassing official channels by operating through related entities registered in foreign jurisdictions but controlled and operated from India.
Modus Operandi
The ED detailed the alleged modus operandi of the entities. In the case of Onmeta, the directorate found that the platform collected money from its US-based customers intending to send remittances to India. This fiat currency was then converted into VDAs and transferred to India-based crypto trading platforms. The proceeds from the sale of these cryptocurrencies were subsequently transferred to the bank accounts of Onmeta’s parent company, Mokshagna Technologies Pvt Ltd., and then distributed to customers in India. The ED noted that the primary individual behind Onmeta’s operations is based in the USA, controlling activities with the help of family members in India.
The agency also flagged concerns about these entities advertising “instant cross-border money transfers” using cryptocurrencies despite lacking the necessary RBI authorisation.
Key facts
| Aspect | Detail |
|---|---|
| Date of searches | June 17 |
| Platforms involved | Transak, Carret, Xpat, BuyHatke (Onramp.money), Onmeta (Abhibha Technologies Pvt. Ltd.) |
| Frozen assets | ₹6 crore in various bank accounts |
| Alleged violation | Unauthorised cross-border money transfers via Virtual Digital Assets (VDAs), circumvention of FEMA, non-compliance with RBI mandates for remittances |
| Regulatory status of VDAs | Unregulated in India, subject to 30% capital gains tax and 1% TDS. Classified as “high risk” by parliamentary committee due to money laundering, trafficking, and radicalisation concerns. |
Regulatory Context in India
This development underscores the ongoing regulatory challenges surrounding cryptocurrencies in India. While VDAs remain unregulated, they are subject to a 30% capital gains tax and a 1% Tax Deducted at Source (TDS) on every transaction. Authorities, including the parliamentary standing committee on finance, have repeatedly flagged the risks associated with the crypto ecosystem, classifying it as “high risk” due to concerns over money laundering, trafficking, radicalisation, and suspicious transactions.
For Coruja.in readers, particularly those in India’s startup and tech sectors, this investigation highlights the increasing scrutiny on Web3 and crypto-related financial services. Businesses operating in this space must ensure strict compliance with existing financial regulations, especially concerning cross-border transactions, to avoid legal repercussions from authorities like the ED. This also signals a continued focus from Indian regulators on preventing the use of VDAs for bypassing established financial frameworks.