The Enforcement Directorate (ED) has launched investigations into alleged unauthorised cross-border cryptocurrency transfers worth more than ₹4,940 crore, putting crypto platforms Mudrex and Saber.money, along with decentralised finance (DeFi) protocol Instadapp and its associated platform Fluid, under scrutiny. The agency is examining suspected violations of the Foreign Exchange Management Act (FEMA), which governs foreign exchange transactions and cross-border money movement in India.
The ED’s Bengaluru Zonal Office conducted searches at four premises on October 27, including three locations in Bengaluru and one in Madhya Pradesh. According to the agency, its preliminary investigation indicates that cryptocurrencies, particularly stablecoins such as USDT and USDC, were allegedly used to move money across borders outside authorised channels. The investigation covers two separate sets of transactions involving different entities, and the allegations have not yet been established through a final adjudication or court finding.
Key Takeaways
- Total amount under investigation: More than ₹4,940 crore in alleged unauthorised cross-border crypto transactions.
- Platforms named: Mudrex, Saber.money, Instadapp and Fluid.
- Main investigation: The ED alleges FEMA violations exceeding ₹4,600 crore involving Mudrex and Saber.money.
- Separate case: Transactions worth approximately $40 million, or around ₹380 crore, are being examined in connection with Instadapp and Fluid.
- Searches: Four premises were searched on October 27, 2026, in Bengaluru and Madhya Pradesh.
- Crypto assets: Stablecoins, including USDT and USDC, are central to the investigation.
- Regulatory concern: The ED is examining whether cryptocurrency was used to facilitate international money transfers without the necessary authorisation.
Why Is the ED Investigating Crypto Transfers Worth ₹4,940 Crore?
The ED’s investigation focuses on whether cryptocurrency platforms and associated entities facilitated international money transfers without following the authorised foreign exchange framework.
Under FEMA, cross-border payments and foreign exchange transactions must comply with applicable regulatory requirements. The ED alleges that certain entities used cryptocurrency to facilitate these transfers instead of authorised payment and remittance channels.
The agency’s preliminary findings identify two separate investigations.
| Investigation | Entities involved | Alleged amount |
|---|---|---|
| First investigation | Mudrex and Saber.money, operated by RPFAS Technologies Pvt Ltd | More than ₹4,600 crore |
| Second investigation | Instadapp and associated platform Fluid | Around $40 million, approximately ₹380 crore |
| Combined reported amount | Both investigations | More than ₹4,940 crore |
The amounts represent alleged FEMA contraventions identified during preliminary investigations. They should not be interpreted as a final finding of wrongdoing or a confirmed loss to investors.
Mudrex and Saber.money Under ED Scanner
The first part of the investigation concerns Bengaluru-based RPFAS Technologies Pvt Ltd, which operates the cryptocurrency platforms Mudrex and Saber.money.
According to the ED, the company allegedly advertised instant international money transfers using cryptocurrencies despite not having the required authorisation from the Reserve Bank of India (RBI) for such payment services.
The agency is examining the alleged use of cryptocurrency on-ramp and off-ramp services.
An on-ramp allows users to convert traditional currencies, such as Indian rupees, US dollars or euros, into cryptocurrencies. An off-ramp enables users to convert those digital assets back into conventional currencies and withdraw the proceeds into bank accounts.
The ED alleges that these services were used to facilitate cross-border transfers through stablecoins, including USDT and USDC.
How the alleged transfer mechanism worked
The investigation is examining a transaction structure involving several stages:
- Customer deposits: Users allegedly deposited conventional currency into bank accounts associated with the platforms.
- Crypto conversion: The funds were allegedly used to purchase cryptocurrencies, particularly stablecoins.
- Cross-border movement: Digital assets were allegedly transferred through cryptocurrency platforms and overseas entities.
- Conversion and payout: The crypto assets were converted back into conventional currency, allowing money to reach intended recipients.
The ED is also examining alleged large over-the-counter (OTC) transactions, foreign crypto platforms and entities incorporated in overseas jurisdictions.
The agency’s preliminary investigation indicates alleged FEMA violations exceeding ₹4,600 crore in connection with the Mudrex and Saber.money operations.
Importantly, the investigation concerns the alleged use of these services for unauthorised money transfers. It does not automatically establish that every customer transaction or ordinary cryptocurrency trade on the platforms was illegal.
Instadapp and Fluid Face Separate Investigation
The second part of the ED investigation concerns Instadapp, a decentralised finance protocol built on the Ethereum blockchain, and its associated platform Fluid.
Unlike conventional cryptocurrency exchanges, DeFi protocols use blockchain-based smart contracts to facilitate financial activities. These can include lending, borrowing, managing digital assets and swapping cryptocurrencies.
The ED is examining whether foreign entities associated with the protocol were incorporated overseas but effectively managed and operated from India.
According to the agency, some associated entities allegedly lacked physical offices or employees at their registered addresses, while their operations were managed from India.
The investigation is also examining the movement of funds received from overseas investors.
The ED has alleged that stablecoins were sold through foreign platforms and the proceeds were credited to overseas bank accounts. It is further examining whether some funds were subsequently transferred to India as payments for software development and consultancy services that the agency suspects may not have reflected genuine commercial activity.
The agency has also alleged that prepaid cards issued by foreign banks were used to meet certain expenses and that funds were routed to accounts in Dubai.
The preliminary investigation has identified alleged FEMA contraventions of approximately $40 million, or around ₹380 crore, in the Instadapp-related case.
These are investigative allegations, and the entities concerned have not been conclusively found guilty through a final legal determination.
What Are USDT and USDC, and Why Are They Important?
Stablecoins are cryptocurrencies designed to maintain a relatively stable value by being linked to another asset, commonly the US dollar.
Two of the most widely used stablecoins are:
| Stablecoin | Issuer | Main purpose |
|---|---|---|
| USDT (Tether) | Tether | Digital token designed to track the US dollar |
| USDC (USD Coin) | Circle | Digital token designed to track the US dollar |
Unlike Bitcoin, whose market price can fluctuate significantly, stablecoins are designed to maintain a value close to their reference currency.
Their relatively stable value and ability to move across blockchain networks make them useful for cryptocurrency trading, digital asset settlements and international transfers.
However, the same characteristics can create regulatory challenges.
Traditional international remittances generally pass through regulated financial institutions and payment systems. Cryptocurrency transfers can move between digital wallets across borders without following the same conventional banking route.
That does not make every stablecoin transfer illegal. The legal question in the ED’s investigation is whether the entities involved were conducting activities that required regulatory authorisation and whether the transactions complied with FEMA.
Why Does FEMA Matter for Cryptocurrency Transfers?
FEMA, 1999, provides India’s legal framework for foreign exchange transactions.
It regulates how individuals and businesses receive, send, hold and transfer foreign currency and related financial assets across international borders.
For businesses offering payment and remittance services, the relevant regulatory permissions and compliance obligations depend on the nature of the activity.
The ED is examining whether the entities under investigation effectively operated cross-border payment services without the necessary authorisation.
Section 37 of FEMA gives the Enforcement Directorate powers to investigate suspected violations, including conducting searches in accordance with the law.
The October 27 searches were carried out under this provision.
The distinction between cryptocurrency trading and providing a cross-border payment service is important. A person buying or selling digital assets is not automatically operating an international remittance business. Regulators examine the actual nature and structure of the transactions.
Second Major ED Crypto Investigation in Recent Months
The latest investigation follows another ED operation in June 2026 involving five Bengaluru-based companies.
On June 17, the agency searched six premises in connection with suspected unauthorised cross-border money transfers using virtual digital assets.
The companies and platforms named in that investigation included:
- Transak
- Carret
- Xpat
- Onramp.money
- Onmeta
The ED alleged that these entities used cryptocurrency on-ramp and off-ramp services to facilitate cross-border transfers outside authorised channels.
In that case, the agency said it had frozen bank accounts containing approximately ₹6 crore during the investigation.
The two investigations indicate that regulators are increasingly examining how cryptocurrency businesses handle international payments, foreign entities and stablecoin transactions.
What the Investigation Means for India’s Crypto Industry
The ED’s latest action highlights the regulatory challenges facing cryptocurrency companies that operate across multiple countries.
India has introduced taxation requirements for virtual digital assets, including a 30% tax on specified income from their transfer and a 1% tax deducted at source on applicable transactions. However, taxation does not itself amount to authorisation to operate a payment system or conduct regulated cross-border remittance services.
For crypto businesses, this creates an important compliance distinction: following tax rules does not automatically satisfy FEMA or other financial regulatory requirements.
The investigation could encourage platforms to review their international payment structures, foreign subsidiaries, wallet arrangements and relationships with overseas exchanges.
It may also increase scrutiny of stablecoin-based remittances and OTC cryptocurrency transactions.
For users, the investigation does not mean that all cryptocurrency holdings or transactions on the named platforms have been declared illegal. The outcome will depend on the evidence gathered and the specific activities examined by the authorities.
The Bigger Picture
India’s cryptocurrency ecosystem is operating at the intersection of digital innovation and a financial regulatory framework designed largely around conventional institutions. Stablecoins and DeFi protocols make it possible to move digital value across borders quickly, but they also raise questions about jurisdiction, reporting, foreign exchange compliance and accountability.
The ED’s investigation signals that authorities are focusing not only on cryptocurrency trading but also on the underlying financial activities conducted through digital assets. The distinction between offering a crypto investment service and facilitating international money transfers could become increasingly important for fintech and Web3 businesses operating in India.
Looking Ahead
The immediate focus will be on the evidence collected during the October 27 searches and the ED’s examination of transaction records, overseas entities, crypto wallets and banking channels. The agency will need to establish the nature of the transactions, the role of each entity and whether the activities violated FEMA provisions. The companies’ responses and any subsequent regulatory or legal proceedings will be important in determining the outcome.
For India’s crypto industry, the case could become another significant test of how stablecoin transfers and decentralised finance businesses fit within existing financial regulations. Companies offering international payment-related services may face greater pressure to demonstrate that their operating structures, overseas relationships and transaction flows comply with applicable Indian laws.
Frequently Asked Questions
1. Why is the ED investigating ₹4,940 crore in crypto transfers?
The ED is investigating alleged violations of FEMA involving cryptocurrency-based cross-border transfers. It suspects that certain entities used stablecoins and overseas platforms to move money outside authorised channels.
2. Which crypto platforms are under investigation?
The investigation involves Mudrex and Saber.money, operated by RPFAS Technologies Pvt Ltd, as well as the DeFi protocol Instadapp and its associated platform Fluid.
3. What is the alleged amount involved in the Mudrex and Saber.money case?
The ED’s preliminary investigation indicates alleged FEMA violations exceeding ₹4,600 crore involving the two platforms.
4. What is the Instadapp and Fluid investigation about?
The ED is examining alleged FEMA contraventions of approximately $40 million, or around ₹380 crore, involving associated overseas entities, stablecoin transactions and the movement of funds between foreign and Indian accounts.
5. What are USDT and USDC?
USDT and USDC are stablecoins designed to maintain a value close to the US dollar. They can be transferred through blockchain networks and are widely used in cryptocurrency trading and digital asset settlements.
6. Does the ED investigation mean cryptocurrency is illegal in India?
No. The investigation concerns alleged unauthorised cross-border financial activities and possible FEMA violations. It does not establish that all cryptocurrency trading or ownership in India is illegal. Individual activities remain subject to applicable tax and regulatory requirements.
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