The Enforcement Directorate conducted search operations at four locations across Bengaluru and Madhya Pradesh under Section 37 of the Foreign Exchange Management Act, 1999, following allegations of large-scale unauthorized cross-border remittances using cryptocurrencies and stablecoins. Officials from the agency’s Bengaluru Zonal Office carried out the searches on October 27 after receiving specific complaints against Bengaluru-based RPFAS Technologies Private Limited. The firm operates the platforms Mudrex and Saber.money, which allegedly facilitated cross-border transfers and virtual asset trading without statutory authorization. A covert inquiry revealed that these entities bypassed regulated banking routes, routing transactions through dollar-pegged stablecoins like USDT and USDC while setting up an unauthorized remittance mechanism.
Operations of Mudrex and Saber.money Under Scrutiny
Investigators found that the firm actively promoted services online to facilitate instant cross-border remittances through virtual digital assets despite lacking statutory authorization from the Reserve Bank of India. The company offered on-ramp facilities to convert fiat currencies into crypto assets such as Bitcoin or USDT, alongside off-ramp services that allowed users to liquidate crypto holdings back into bank accounts. Searches and recorded statements revealed a systematic transaction pattern where clients registered on these portals and deposited fiat funds into designated company accounts. These funds were converted into stablecoins, subsequently liquidated on domestic exchanges, and routed to end recipients abroad, thereby bypassing conventional regulatory scrutiny.
Shell Networks and Foreign Trading Platforms
The probe uncovered a web of overseas shell entities incorporated in Canada, Lithuania, and the United States, established to evade formal channels while remaining under operational control from within India. These companies engaged in extensive over-the-counter transactions and utilized offshore crypto exchanges, maintaining heavy balances on platforms including Binance and Bybit. Several overseas operational expenses were also settled directly through crypto balances in contravention of foreign exchange regulations. Initial findings indicate that the value of cross-border transfers executed without regulatory approvals and parked on foreign platforms exceeds ₹4,600 crore.
Instadapp Protocol and Offshore Fund Diversion
A parallel track of the investigation focuses on the decentralized finance protocol Instadapp, built on the Ethereum blockchain and currently operating primarily as Fluid. Launched in 2018, the protocol uses automated smart contracts to offer crypto lending, borrowing, and swapping facilities without physical branch infrastructure. Open-source records indicate the protocol manages assets exceeding $1 billion and has generated nearly $149 million in cumulative fees. Although portrayed as a Delaware-registered decentralized business under Instadapp Labs LLC, its primary development operations and founders, including Soumy Jain, were located in India.
Investigators found that the founders operated several paper entities across low-tax jurisdictions, including Instadapp Labs Inc in Delaware, Interop Labs Limited and Summerspeak Limited in the British Virgin Islands, Upsurge Labs and Bhindi Labs in Singapore, and Pebble Labs Technology Limited in Dubai. Revenue earned from the protocol was collected in stablecoins in a multi-signature wallet of the British Virgin Islands firm and liquidated through Singapore entities Independent Reserve and QCP Capital. The proceeds were subsequently credited to the Singapore accounts of Upsurge Labs and Bhindi Labs before being remitted back to Indian entities under the guise of fake software development and consultancy fees. Prepaid cards from Singapore banks were used to settle domestic operational costs, while funds were also diverted to founders’ bank accounts in Dubai. The probe has detected alleged FEMA violations involving roughly $40 million within this specific network as further inquiries continue.
