India Targets Crypto Operations in Major Raids
The Enforcement Directorate (ED) in India has intensified its scrutiny of the country’s cryptocurrency market. The agency recently conducted raids at six locations tied to five platforms in Bengaluru, alleging that these companies were involved in unauthorized cross-border money transfers.
The raids were executed this week as part of an investigation under the Foreign Exchange Management Act (FEMA). The platforms targeted include Transak Technology India, Carretx Technologies, Mokshagna Technologies (now known as Remit2Any), Buyhatke Internet (which operates Onramp.money), and Abhibha Technologies (Onmeta). The ED has frozen around ₹6 crore from bank accounts suspected of facilitating these illegal transactions.
Uncovering the Money Movement Strategy
The ED revealed how these platforms allegedly circumvented local laws. Customers would deposit Indian rupees into bank accounts managed by the companies. They would then use this money to purchase digital assets, mainly USDT stablecoins. These coins were sent via crypto platforms, then exchanged for cash on the other side of the border.
According to the ED, the companies did not comply with necessary regulations, such as providing purpose codes or Foreign Inward Remittance Certificates. This allowed them to bypass FEMA’s reporting requirements entirely.
Specific accusations include Transak allegedly converting Indian profits into cryptocurrency and sending the funds to its American affiliate, Transak Inc. Additionally, Carret is accused of conducting over-the-counter trades with foreign remittance applications to facilitate the transfer of money into India. Mokshagna is said to have helped U.S. customers deposit funds that were then converted to crypto and moved to Indian exchanges for payout.
These actions come just days after the ED detained a suspect involved in a ₹500-crore Ponzi scheme linked to a token named Korvio Coin, which reportedly affected over 248,000 investors through multi-level marketing tactics. On the same day, the agency addressed a phishing scheme related to Coinbase, involving an Indian national who was already serving time in the U.S. for stealing more than $20 million.
Towards Better Regulation in the Crypto Space
Currently, India does not have a specific licensing framework for crypto exchanges or the services that connect them to banks. In lieu of formal regulations, the government has implemented a 30% tax on profits from cryptocurrency transactions, along with a 1% tax deducted at source on each trade. This year, virtual asset service providers were brought under the same anti-money laundering laws that apply to banks.
Historically, India’s enforcement actions have focused on fiat on-ramps and off-ramps, as these are the primary points for converting rupees into cryptocurrency. This strategy aligns well with the recent raids, allowing authorities to closely monitor the flow of funds across borders.
