India’s Directorate of Enforcement (ED) has intensified scrutiny of crypto-based cross-border payment activity after conducting searches at six premises in Bengaluru under Section 37 of the Foreign Exchange Management Act (FEMA), 1999. The searches, carried out on June 17, 2026, targeted multiple entities allegedly involved in unauthorized international money transfers using Virtual Digital Assets (VDAs).

The companies named in the ED press release include Transak Technology India Private Limited, Carretx Technologies Private Limited, Mokshagna Technologies Private Limited, Buyhatke Internet Private Limited, and Abhibha Technologies Private Limited. Their associated brands include Transak, Carret, Xpat, Onramp.money, and Onmeta.

The agency has alleged that these entities enabled cross-border transfers through crypto assets, especially stablecoins such as USDT, without being authorized by the Reserve Bank of India (RBI). Preliminary findings indicate alleged FEMA contraventions involving more than ₹2,500 crore, with restraint orders placed on bank accounts containing around ₹6 crore.

• ED Targets Crypto-Based Cross-Border Transfers
• How the Alleged VDA Remittance Model Worked
• Stablecoins, OTC Deals & Regulatory Gaps
• What This Means for India’s Crypto Compliance Landscape

ED Targets Crypto-Based Cross-Border Transfers

The ED said its Bengaluru Zonal Office conducted searches after receiving complaints alleging large-scale FEMA violations by Bengaluru-based entities using cryptocurrencies for cross-border transactions. According to the agency, discreet enquiries and intelligence gathering indicated that several unauthorised payment system operators were using VDAs to bypass formal remittance channels.

The press release states that these entities were allegedly advertising instant cross-border money transfer services using cryptocurrencies, despite not being authorised by RBI for such activity. The agency also noted that some platforms promoted services such as buying, selling, swapping, and converting fiat currency into crypto and back for global money movement.

This case is significant because it moves beyond the usual crypto enforcement themes of tax evasion, fraud, or money laundering. Instead, it focuses directly on whether crypto rails are being used as a substitute for regulated foreign exchange and remittance infrastructure.

The ED’s core allegation is that the companies under investigation offered remittance-like services without following this framework. That makes the case important for India’s wider digital asset ecosystem, especially at a time when stablecoins are increasingly being used for payments, treasury movement, and cross-border settlement.

EtherWorld has previously covered how stablecoins are becoming more important for enterprise finance in What Enterprises Need to Know About Stablecoins. The ED action shows the other side of that trend: as stablecoins become more useful for fast settlement, regulators are also becoming more alert to their use outside approved financial channels.

How the Alleged VDA Remittance Model Worked

According to the ED, evidence found during the searches and statements recorded under FEMA revealed a common operating model for cross-border transfers using VDAs.

The alleged process began when a user registered on one of the platforms and deposited money into the bank account of the company. That money was then used to purchase VDAs, especially stablecoins such as USDT. The crypto assets were sold in India through Indian crypto exchanges or over-the-counter arrangements, and the sale proceeds were remitted to the intended recipient.

The agency also stated that recipients could claim TDS from these transactions. This is notable because it suggests that the crypto transactions may have appeared as domestic VDA trades while being used as part of an international transfer structure.

The ED specifically highlighted the case of Mokshagna Technologies Private Limited, associated with Xpat, formerly Remit2Any. According to the agency, the entity allegedly collected money from customers in the United States, converted it into VDAs, transferred those assets to India-based crypto trading platforms, and then distributed the proceeds to recipients in India after large-volume OTC sales. The ED also alleged that the main person behind the operation was based in the United States and controlled the activity with help from family members in India.

In the case of Transak Technology India Private Limited, the agency alleged that the company provided off-ramp services where money deposited in Indian bank accounts was converted into VDAs, sold, and withdrawn outside India. The ED further alleged that Transak used a related U.S.-based entity, Transak Inc., to transfer operational profits using VDAs.

For Carretx Technologies Private Limited, the ED said its mobile application “Carret” allowed retail users to deposit Indian rupees, receive crypto in their wallets, and later sell crypto with the proceeds credited back to their bank accounts. The agency alleged that the company undertook OTC deals with foreign-based remittance apps for unauthorised transfer of money into India.

These claims remain part of an ongoing investigation. However, the ED’s description points to a broader regulatory concern: when crypto platforms combine fiat deposits, stablecoin conversion, OTC liquidity, and foreign counterparties, they may begin to resemble payment or remittance systems, even if they present themselves as crypto on-ramp or off-ramp platforms.

🚨BREAKING: 🇮🇳 ED RAIDS 5 CRYPTO PLATFORMS OVER ALLEGED FEMA VIOLATIONS.

Key findings include:
• Alleged unauthorized cross-border crypto transfers exceeding ₹2,500 crore
• Searches conducted at 6 locations in Bengaluru
• Platforms under scrutiny include Transak, Xpat… pic.twitter.com/fWUNAZ28ti

— Crypto India (@CryptooIndia) June 19, 2026

Stablecoins, OTC Deals & Regulatory Gaps

The ED’s press release repeatedly refers to stablecoins such as USDT. This is important because stablecoins are increasingly used as bridge assets between traditional currencies and blockchain-based settlement systems. Their appeal comes from speed, liquidity, and relative price stability compared with volatile crypto assets such as Bitcoin or Ether.

However, the same features that make stablecoins useful for legitimate settlement also make them attractive for regulatory arbitrage. A user can convert fiat into a stablecoin, transfer it across wallets or platforms, and liquidate it in another jurisdiction faster than many traditional banking channels. Without proper licensing and reporting, this can create blind spots for regulators.

This is not only an Indian concern. Globally, stablecoin regulation is becoming stricter. In Europe, the Markets in Crypto-Assets framework has already forced exchanges and issuers to reassess stablecoin compliance, as discussed in EtherWorld’s Europe Delists USDT as MiCA Rules Take Effect. Similarly, the emergence of regulated sovereign-backed or fiat-backed token models, such as those discussed in India’s First Sovereign-Backed Stablecoin, shows that regulators are not rejecting tokenized money entirely. Instead, they are pushing it toward authorised, transparent, and compliant structures.

The ED also referred to the use of large-volume OTC deals on India-based crypto trading platforms, shell entities incorporated in known tax havens, and foreign crypto trading platforms. OTC activity is common in crypto markets because it allows large transactions to be executed without causing major price impact on public order books. But when OTC desks are used to settle cross-border obligations without proper documentation, they can become a regulatory concern.

For India, the case highlights a difficult policy challenge. The country already taxes VDA transactions and requires reporting from virtual asset service providers under anti-money laundering rules. But tax visibility does not automatically mean that a transaction is compliant with FEMA. A crypto transaction may be visible for tax purposes but still violate foreign exchange rules if it effectively moves money across borders without authorisation.

This distinction matters for builders, exchanges, wallet providers, and payment startups. Offering crypto access is one thing. Offering remittance-like services through crypto rails is another. The ED action signals that Indian authorities may closely examine whether crypto platforms are merely facilitating asset conversion or effectively operating as cross-border money transfer networks.

What This Means for India’s Crypto Compliance Landscape

The preliminary findings in the ED investigation allege unauthorised cross-border transfers exceeding ₹2,500 crore. During the searches, the agency placed restraint orders on bank accounts used by some of the entities, freezing balances of around ₹6 crore. Further investigation is currently underway.

For India’s crypto sector, the message is clear: regulatory scrutiny is moving deeper into operational models. Authorities are not only looking at whether users trade crypto, but also how platforms structure fiat flows, where related entities are located, how foreign counterparties are used, and whether domestic crypto liquidity is being used to settle international transfers.

This could have several implications.

First, crypto on-ramp and off-ramp providers may need to strengthen internal controls around transaction purpose, source of funds, destination of funds, and foreign counterparty exposure. Merely calling a service an on-ramp or off-ramp may not be enough if the practical outcome is cross-border money movement.

Second, Indian exchanges and OTC desks may face more pressure to identify suspicious transaction patterns linked to remittance activity. Large-volume stablecoin trades, repeated fiat deposits and withdrawals, and links to foreign remittance apps may attract closer monitoring.

Third, startups building payment products around stablecoins will need to think carefully about licensing. Stablecoins can reduce settlement friction, but when used for regulated activities such as remittances, payouts, or treasury transfers, they may fall within existing financial laws even if the underlying technology is new.

The ED’s Bengaluru searches underline a larger global trend. Stablecoins are becoming payment infrastructure, but payment infrastructure cannot remain outside regulatory supervision. Whether in Europe under MiCA, Japan through regulated stablecoin frameworks, or India through FEMA enforcement, governments are drawing clearer boundaries around crypto-based money movement.

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