Bengaluru: The route was not a hawala operator with a suitcase. It was a phone screen and a stablecoin.
The Enforcement Directorate's Bengaluru zonal office has alleged unauthorised cross-border money transfers running to more than Rs 4,600 crore, routed through cryptocurrency platforms, and searched three premises in Bengaluru and one in Madhya Pradesh on Tuesday in connection with it.
The case is under the Foreign Exchange Management Act and names RPAS Technologies Private Limited, the company that operates Mudrex and Saber.money, along with entities linked to the decentralised finance protocol Instadapp.
According to the agency's press release of October 29, the searches were carried out under Section 37 of FEMA. The investigation began on complaints alleging large-scale FEMA violations.
The alleged method, as the ED describes it: users registered on the platforms and deposited money into the company's bank accounts. Those funds bought virtual digital assets, mainly stablecoins such as USDT, which were then sold on Indian crypto exchanges and the proceeds remitted to the intended recipients. The platforms advertised instant international transfers, offering to buy, sell, swap and convert fiat currency into crypto and back.
The agency's objection is authorisation. Cross-border remittances need Reserve Bank of India approval under the FEMA framework, and the ED says these transactions went around it.
Its preliminary findings also point to large-volume over-the-counter deals involving entities incorporated in Canada, Lithuania and the United States, which the agency says operated foreign crypto trading platforms used for the transfers. Some of the associated entities, it says, had no physical offices or employees at their registered addresses.
On Instadapp, a DeFi protocol on the Ethereum blockchain, the ED says the business was managed from India by one of its founders, Somay Walia. Preliminary findings indicate alleged FEMA contraventions of about $40 million, roughly Rs 340 crore, in the Instadapp-related transactions.
No arrest has been announced, and the agency has not named anyone as accused beyond identifying the company and the founder. The investigation is continuing.
For an Indian user of such a platform, the case turns on a simple question the ED is now testing in law: whether a rupee that becomes a dollar-pegged token and lands in a foreign wallet has left the country under FEMA, and who is responsible if it has.