ED's ₹2,500-Crore Crypto Bust Exposes India's

ED's ₹2,500-Crore Crypto Bust Exposes India's Remittance Loophole

The Enforcement Directorate unmasked unauthorized crypto ramps moving billions across borders. The real risk: shell companies and foreign exchanges operating freely from Indian soil.

The Directorate of Enforcement exposed unauthorized cryptocurrency remittance networks operating from Bengaluru offices on June 17, conducting simultaneous searches at six companies and detecting alleged FEMA violations totaling more than ₹2,500 crore. The operation targeted Transak Technology India Pvt. Ltd., Carret Technologies Pvt. Ltd., and four other entities that purportedly facilitated international money transfers through virtual digital assets without Reserve Bank authorization. The real exposure is structural: domestic intermediaries were channeling flows through global platforms fully insulated from India's regulatory perimeter.

According to ED documents, the firms operated dual-layer remittance channels. Customers deposited rupees into company bank accounts; the funds were converted to stablecoins, then moved across crypto exchanges and into foreign wallets before beneficiaries could withdraw fiat. The agency alleged that none of the entities held RBI authorization, nor did they comply with FEMA's mandatory purpose codes and Foreign Inward Remittance Certificates. One firm—Mokshagna Technologies—allegedly routed US-sourced customer funds directly into Indian crypto platforms and then distributed proceeds to Indian beneficiaries under US-based operator control with India-based family support. Transak shifted operational profits to a US-related entity using crypto tokens; Carret engaged in over-the-counter trading masking remittance intent.

The ED's move reflects India's tightening grip on crypto workflows, but also the speed at which enforcement lags policy intent. In late May 2026, the Financial Intelligence Unit (FIU-IND) demanded data on over-the-counter crypto trades above $10,000 from at least three major exchanges—a direct signal that authorities recognize OTC channels as a blind spot in AML oversight. According to reporting on FIU-IND's directive, OTC deals bypass open-order-book transparency because brokers negotiate size and price directly, then find counterparties offline. This gives corporate entities cover: tracing beneficial owners through shell structures has proven harder than monitoring retail traders on public orderbooks.

The Bengaluru probe reveals how quickly foreign-facing infrastructure can embed itself domestically. Transak and competitors rented Indian office space, hired staff, acquired corporate registration—all the trappings of legitimacy—while actual asset custody and final settlement happened overseas through exchanges (often crypto platforms themselves) beyond India's regulatory reach. Bank accounts holding approximately ₹6 crore were frozen under FEMA. But investigators found shell companies registered in tax havens linked to those same networks, suggesting that once crypto left Indian soil, regulatory recovery became exponentially harder.

The timing is also significant. India does not yet regulate cryptocurrency itself—the government has resisted imposing a legal framework, fearing systemic risk. But enforcement agencies are tightening the perimeter: FIU-IND has registered 49 crypto exchanges as compliance entities; OTC trades are now under scanner; FEMA cases against remittance intermediaries are mounting. The effect is not regulatory clarity but a widening crack between what's permitted to operate domestically (registered exchanges) and what remains invisible (offshore ramps, private wallets, decentralized finance flows).

For corporate actors and remittance corridors, the risk calculus has shifted. Bengaluru's fintech cluster has hitherto hosted global crypto infrastructure with minimal friction. The ED action signals that housing such operations—even if final settlement happens abroad—now carries FEMA liability. For India's diaspora and business remitters, narrows are narrowing: formal banking remains the legal route, but crypto-enabled alternatives have been made costly and detention-prone overnight.

Watch for three indicators in the coming months. First: whether the FIU-IND's OTC data demand leads to criminal referrals against individuals or entities managing large off-market trades. Second: whether the ED files PMLA proceedings against the seized entities, which would open money-laundering angles beyond FEMA—significantly raising criminal exposure. Third: whether RBI issues any new guidance clarifying which forms of crypto activity (if any) fall within legitimate fintech scope, or whether enforcement remains the primary tool.

Sources

• The Hindu: "ED detects ₹2,500-crore FEMA violations in Bengaluru cross-border crypto transfers probe"
• CryptoTimes: "India's FIU-IND demands OTC trade data from crypto exchanges for transactions over $10,000"
• The Economic Times (via CryptoTimes reporting): "Financial Intelligence Unit puts large crypto OTC deals under scanner, asks exchanges for trade data"