New Delhi | The Enforcement Directorate (ED) has carried out a major enforcement action in connection with an investigation into alleged unauthorised cross-border fund transfers exceeding ₹2,500 crore through cryptocurrency-linked channels. As part of the probe under the Foreign Exchange Management Act (FEMA), the agency conducted searches at multiple premises in Bengaluru and froze assets worth approximately ₹6 crore. Investigators claim that preliminary findings indicate the use of virtual digital assets to facilitate international fund movements outside prescribed regulatory mechanisms.
The searches were conducted at six locations linked to five companies operating in the digital payments and cryptocurrency services sector. According to the ED, these entities allegedly operated platforms that enabled users to convert Indian rupees into virtual digital assets, including stablecoins such as USDT, and subsequently convert them back into fiat currency. The agency is examining whether these activities were carried out without the necessary regulatory approvals and compliance requirements.
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Officials allege that the companies provided so-called “on-ramp” and “off-ramp” services. On-ramp services allow users to convert conventional currency into digital assets, while off-ramp services enable the conversion of digital assets back into traditional banking channels. The ED claims that this infrastructure was used to facilitate large-scale cross-border transfers while allegedly bypassing certain compliance procedures required under India’s foreign exchange regulations.
Investigators further allege that some entities collected funds from overseas customers, converted those funds into virtual digital assets, and then routed them through Indian cryptocurrency platforms before transferring them to intended beneficiaries. According to officials, this process created an alternative channel for fund movement outside traditional banking routes, making the financial trail more complex to trace.
The agency has also pointed to indications of extensive over-the-counter (OTC) cryptocurrency transactions, the use of shell entities located in tax haven jurisdictions, and possible links with foreign crypto platforms. Investigators are now examining whether these structures were used to conceal the source of funds, the identity of beneficiaries, or the ultimate purpose of the transactions.
Experts tracking financial crime and digital asset ecosystems note that cryptocurrency-based cross-border transactions continue to present significant regulatory challenges worldwide. Renowned cybercrime expert and former IPS officer Prof. Triveni Singh said that while digital assets have made financial transactions faster and more global, inadequate compliance and identity-verification mechanisms can create opportunities for misuse. According to him, cryptocurrencies may be exploited to obscure money trails, facilitate unauthorised financial flows, and complicate investigations if proper safeguards are not in place. He added that blockchain analytics, banking records, and digital forensic examinations are crucial in uncovering the complete transaction chain in such cases.
Investigative agencies are now analysing financial records, foreign affiliations, digital wallets, transaction histories, and other electronic evidence linked to the entities under scrutiny. Authorities are also examining whether the alleged transactions involved broader networks operating across multiple jurisdictions. The assets frozen during the searches and the digital evidence seized are expected to play a key role in the next phase of the investigation.
Officials believe that as the probe progresses, additional details may emerge regarding the structure of the network, the movement of funds, and the identities of individuals or organisations that may have benefited from the transactions. The case has drawn attention due to its scale and the growing intersection of cryptocurrency, international payments, and financial regulation.
The investigation remains ongoing, with authorities seeking to determine the extent of any regulatory violations and whether a larger international financial network may have been involved in facilitating the alleged transactions.
