Synopsis
The Enforcement Directorate has initiated a FEMA probe into five companies located in Bengaluru for their alleged involvement in unauthorized cross-border transactions amounting to Rs 2,500 crore through cryptocurrency. Investigations uncovered significant regulatory evasion via online ads promoting immediate fiat-to-crypto swaps and the establishment of shell companies. Consequently, the ED has frozen bank accounts totaling around Rs 6 crore.Listen to this article in summarized format
The central agency conducted searches at six premises in Karnataka's capital city on June 17.
It identified the covered entities through their brand identities and holding company names: Transak (Transak Technology India); Carret (Carretx Technologies); Xpat, formerly known as Remit2any (Mokshagna Technologies); Onramp. money (Buyhatke Internet) and Onmeta (Abhibha Technologies).
It alleged these brands posted online advertisements for buying, selling and swapping cryptocurrency "immediately" or in the "fastest way" to convert fiat to crypto and back for global money transfer.
The agency initiated a probe under the Foreign Exchange Management Act (FEMA) and launched searches based on allegations of unauthorised cross-border money transfers by multiple entities using Virtual Digital Assets (VDAs) or cryptocurrency, the ED said in a statement.
The agency said discreet enquiries found "large-scale" circumvention of FEMA regulations by some unauthorised payment system operators using crypto to undertake the foreign money transfers.
"These entities are openly advertising instant money transfers across borders using cryptocurrencies despite not being authorised by the RBI," the ED alleged.
It claimed the searches found the use of "large-volume" OTC (over-the-counter) deals on India-based crypto trading platforms, use of shell entities especially incorporated in known tax havens, use of foreign-based crypto trading platforms for unauthorised cross-border money transfers.
"The preliminary finding during the investigation revealed contravention of FEMA through unauthorised cross-border money transfer, amounting to more than Rs 2,500 crore," it said.
The agency said it has put restraint orders on some bank accounts of these entiies, having a balance of around Rs 6 crore.
