ED Investigates Mudrex and Instadapp Over Alleged ₹4,600-Crore FEMA Violations

The Enforcement Directorate (ED) has launched an investigation into cryptocurrency platforms Mudrex and Instadapp regarding alleged violations of the Foreign Exchange Management Act (FEMA). On October 27, the agency's Bengaluru Zonal Office conducted searches at three locations in Bengaluru and one in Madhya Pradesh.

Investigation Details

According to an official ED press release dated October 29, the probe focuses on unauthorised cross-border money transfers. Preliminary findings by the agency suggest that these platforms allegedly bypassed authorised banking channels by using virtual digital assets (VDAs), specifically USDT and USDC stablecoins.

• Scope of Allegations: The ED alleges that the entities facilitated international transfers without obtaining required authorization from the Reserve Bank of India (RBI).
• Financial Scale: The agency estimates that the unauthorised transfers and crypto balances held on foreign platforms exceed ₹4,600 crore.
• Operational Methods: Investigators claim the platforms engaged in large-volume over-the-counter (OTC) deals using shell entities incorporated in jurisdictions including Canada, Lithuania, and the United States.

Potential Contraventions

The ED states that the investigation involves RPAS Technologies Private Limited, the firm behind Mudrex and Saber.money. The agency alleges that the platforms enabled users to swap cryptocurrencies and convert fiat currency into digital assets to settle international transactions through Indian bank accounts. Furthermore, the agency alleges that foreign-based expenses were settled using cryptocurrencies in violation of existing regulations. The investigation remains ongoing.