New Delhi, Oct 29 The Enforcement Directorate (ED) on Thursday said it conducted searches in Karnataka and Madhya Pradesh in connection with a foreign exchange violation case worth over Rs 4,900 crore allegedly undertaken through cross-border remittances using cryptocurrency.
The raids, under the Foreign Exchange Management Act (FEMA), covered three premises in Bengaluru and one in Madhya Pradesh on October 26, the federal agency said in a statement.
It added that the searches found a “wide-ranging misuse” of crypto tokens for unauthorised money transfers and financial transactions across the border, including to some tax haven countries.
It alleged that the first entity searched, which operated the Mudrex platform, was advertising instant cross-border money transfers using cryptocurrencies despite not being authorised by the Reserve Bank of India (RBI).
“Preliminary findings during the investigation revealed contravention of FEMA through unauthorised cross-border money transfer, unauthorised crypto balances in foreign platforms amounting to more than Rs 4600 crore,” the statement said.
The second entity, identified as Instadapp, works like an online bank that runs on software instead of staff and branches.
The ED found that users of this platform can lend their crypto tokens to earn interest or borrow against crypto they already hold, and swap one token for another, all through automated computer programs called smart contracts.
It added that preliminary investigations have detected FEMA contraventions of USD 40 million (about Rs 380 crore) against the second entity.
(PTI News)
