ED searches premises linked to Mudrex, Instadapp over alleged ₹4,600-crore FEMA violations

The Enforcement Directorate searched three premises in Bengaluru and one in Madhya Pradesh on October 27. Its Bengaluru Zonal Office carried out the action under Section 37 of the Foreign Exchange Management Act. The investigation concerns entities associated with cryptocurrency platforms Mudrex and Instadapp.

The ED alleges that Bengaluru-based RPAS Technologies Private Limited, which operates Mudrex and Saber.money, helped bypass authorised banking channels. The platforms allegedly advertised instant international transfers using cryptocurrencies, especially USDT and USDC, without required Reserve Bank of India authorisation. They also reportedly offered crypto buying, selling, swapping, and fiat-to-crypto conversions.

The agency identified large OTC deals involving shell entities in Canada, Lithuania, the United States, and elsewhere. It alleges foreign platforms were used to trade crypto while Indian bank accounts settled transactions, and that cryptocurrencies paid foreign expenses. The investigation remains ongoing, so the allegations have not been finally established.

FEMA, the Foreign Exchange Management Act, is India’s legal framework for managing foreign exchange and transactions involving money or assets crossing national borders. It sets rules for how residents, businesses, and financial institutions may send, receive, hold, or settle foreign funds. The ED used Section 37 of FEMA for the searches described in the article.

Cross-border money movement can affect foreign-exchange reserves, tax compliance, financial stability, and the ability to detect fraud or money laundering. FEMA therefore requires certain transactions to follow prescribed procedures and, where applicable, receive approval from authorised institutions or the RBI. These controls create records and identify the parties involved.

In this case, the ED alleges that crypto tokens and foreign platforms enabled transfers outside authorised banking channels. It specifically alleges that instant international transfers were advertised without the required RBI authorisation. The investigation is ongoing, and the allegations still require legal determination.

Stablecoins are crypto tokens designed to keep their value close to a reference asset, usually a fiat currency such as the US dollar. USDT and USDC are widely known dollar-linked stablecoins. Unlike more volatile crypto assets, they aim to reduce price swings, making them more practical for transferring or settling value.

A sender can move stablecoins between digital wallets or platforms without using the same process as a conventional bank transfer. Their blockchain-based design can support transfers across borders and at different times, while platforms can exchange them for other crypto assets or fiat currency. These features may attract users seeking speed or flexibility.

The article says the investigated entities allegedly used USDT and USDC for unauthorised international transfers. It also says the platforms offered crypto buying, selling, swapping, and fiat conversion. Stablecoins themselves are not described as illegal; the issue under investigation is whether their use bypassed FEMA rules and RBI authorisation.

The ED’s preliminary findings put the alleged scale at more than ₹4,600 crore. This figure covers unauthorised cross-border transfers and crypto balances held on foreign platforms. It is the largest concrete figure in the article and shows why the investigation has attracted attention.

The agency linked this amount to crypto-based activity involving platforms, OTC deals, and foreign entities. It alleges that foreign cryptocurrency platforms were used to buy or sell foreign-based crypto assets, while transactions were settled through Indian bank accounts. The ED also alleges that cryptocurrencies paid expenses in foreign countries.

The ₹4,600-crore figure is a preliminary investigative finding, not a final court determination. The article does not provide a separate breakdown between transfers and crypto balances, nor does it identify the amount attributed to each platform. The ED’s investigation is continuing, so the final assessed amount or legal outcome may change.

An authorised banking channel normally records who sends money, who receives it, why it is being sent, and which foreign-exchange rules apply. The ED alleges that the investigated arrangement used crypto tokens and foreign platforms instead, separating the digital movement of value from the banking settlement. That is why it describes the activity as a way to bypass authorised channels.

For example, a foreign-based entity could allegedly buy or sell crypto on an overseas platform, while an Indian bank account settled the related transaction. Stablecoins such as USDT or USDC could serve as the transferable digital asset between platforms or wallets. The agency also identified OTC deals involving shell entities in several countries.

The ED further alleges that foreign expenses were paid with cryptocurrencies. These activities, if established, could mean cross-border value moved without the required RBI authorisation or FEMA process. The investigation is preliminary, however, and the article does not establish guilt.

If the alleged conduct is established, authorities could take action under FEMA against the entities and people responsible. Possible consequences generally include financial penalties, orders involving the assets or transactions, and directions to stop or correct unauthorised activity. The precise outcome would depend on the evidence, findings, and legal process.

The ED’s allegations include advertising instant international transfers without required RBI authorisation, using foreign platforms and Indian bank accounts for settlement, and paying foreign expenses with crypto. It also alleges large OTC deals involving shell entities. These claims could lead investigators to examine both the platforms’ operations and the conduct of associated individuals or entities.

The article does not state that any violation has been proved or announce a punishment. It reports searches and preliminary findings, while the investigation continues. Therefore, any consequences remain possible outcomes rather than confirmed results, and the final legal position will depend on the investigation and subsequent proceedings.

In an authorised foreign-exchange system, a bank or approved intermediary processes a cross-border payment under applicable rules. It identifies the parties, checks the transaction’s purpose and documents, applies exchange controls where required, and maintains a record. The intermediary then routes the payment through the banking system and reports relevant details to regulators.

This structure gives governments visibility into money entering and leaving the country. It helps authorities monitor foreign-exchange reserves, enforce tax and anti-money-laundering rules, prevent fraud, and identify sanctions or other prohibited activity. It also gives customers a regulated process for resolving errors and disputes. The RBI’s authorisation is part of this oversight in India.

The article says the investigated entities allegedly promoted instant international crypto transfers without required RBI authorisation. It further alleges that foreign platforms and Indian bank accounts were used to settle transactions. The concern is therefore not simply digital technology, but whether the arrangement removed transactions from the authorised oversight system required by FEMA.