NEW DELHI: In 2025, India’s Enforcement Directorate (ED) has ramped up investigations into startups across gaming, e‑commerce, fintech, and luxury consumer services. What began as scattered inquiries has bloomed into a sweeping enforcement action highlighting governance gaps on foreign investment, structural compliance, and regulatory arbitrage.
Probo Gaming Platform Freezes ₹284.5 Crore Amid ‘Illegal Betting’ Probe.
ED conducted searches at Probo Media Technologies’ facilities in Gurugram and Jind on July 8–9, citing illegal gambling under PMLA. The regulator froze fixed deposits, shares, and bank locker assets worth ₹284.5 crore. FIRs in Haryana and Uttar Pradesh allege users were lured via “yes‑or‑no” outcomes masked as opinion‑trading, but essentially amounting to betting. Probo, backed by Peak XV and others, said it fully cooperates and remains confident in compliance processes.
Startups Face FEMA Action Over Alleged FDI Violation—₹1,654 Cr in Myntra, ₹913 Cr in Simpl
On July 23, ED lodged a FEMA complaint against Myntra (Flipkart entity), alleging misuse of the “wholesale cash‑and‑carry” model to route ₹1,654.35 crore in FDI through group entity Vector E‑Commerce, contravening intra‑group sales cap norms.
Separately, buy‑now‑pay‑later platform Simpl (operated by One Sigma Technologies) faces FEMA charges worth ₹913.76 crore. ED alleges it misclassified its activity as IT services to attract capital under the automatic route rather than financial services requiring government approval. It also issued convertible notes without prior permission.
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Additional FEMA Triggers: Paytm Subsidiaries and Global Forex Platform OctaFX
In April 2025, ED issued a show‑cause notice to Paytm entities—One97 Communications, Little Internet, Nearbuy—for FEMA violations amounting to ₹611 crore, linked to historical overseas investments made pre‑acquisition without RBI reporting and pricing compliance.
Meanwhile, global forex firm OctaFX is also under ED scrutiny for allegedly laundering nearly ₹800 crore using fake KYC, mule accounts, and shell companies. Assets, including a yacht and Spanish real estate worth over ₹292 crore, have been attached under PMLA.
Broader Implications: Compliance Now a Live Startup Risk
ED’s expanded reach signals a regulatory shift: digital‑first firms must prioritise statutory compliance. While ED convictions remain rare, the willingness to invoke PMLA and FEMA poses elevated operational risk for startups that opted for ‘shortcuts’. Investors are now treating regulatory diligence and proper structuring as core to risk mitigation.