Enforcement Directorate officials conduct search operations at a Bengaluru tech office
The Enforcement Directorate (ED) has initiated searches across multiple premises linked to five cryptocurrency platforms based in Bengaluru. The investigation centers on allegations of unauthorized cross-border money transfers facilitated through virtual digital assets (VDAs).
The ED conducted searches on June 17 at premises associated with Web3 payment platform Transak, crypto trading platform Carret, remittance startup Xpat, cashback platform BuyHatke (linked to Onramp.money), and Abhibha Technologies Pvt. Ltd. (parent of Onmeta). As part of the operation, the agency has frozen bank accounts holding approximately ₹6 Cr ($720,000 USD) to prevent further unauthorized transfers.
The probe was triggered by a complaint alleging significant violations of foreign exchange norms by these entities. The ED’s preliminary findings suggest a circumvention of the Foreign Exchange Management Act (FEMA) by using VDAs for cross-border payments. Notably, none of the investigated platforms are designated by the Reserve Bank of India (RBI) as authorized entities for offering cross-border VDA transfer services.
According to the ED, these platforms were not adhering to regulatory requirements such as purpose codes for remittances. The agency indicated that the entities often operate through related foreign-registered entities controlled from India, bypassing official channels.
The modus operandi identified by the ED involves users depositing money into company bank accounts, which is then used to purchase VDAs, particularly stablecoins like USU. These VDAs are subsequently sold on Indian crypto exchanges, with the sale proceeds remitted to the intended recipients abroad. The ED also highlighted that these platforms were advertising instant cross-border transfers using cryptocurrencies without proper authorization.
In the specific case of Onmeta, the ED stated that the platform collected funds from US-based customers for remittances to India, converted these into VDAs, transferred them to Indian crypto trading platforms, and then disbursed the proceeds to Indian customers after converting back to fiat. The main operator of Onmeta is reportedly based in the USA, managing operations with family members in India.
Cryptocurrencies in India are subject to a 30% capital gains tax and a 1% Tax Deducted at Source (TDS) on transactions. The parliamentary standing committee on finance recently classified cryptocurrencies as a “high-risk” asset class due to concerns over money laundering and illicit activities.
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