ED Recovers ₹1.37 Cr in Cash in Bengaluru Seat Blocking Scam; BMS, Akash, New Horizon Colleges Under Probe
Bengaluru: The Enforcement Directorate conducted searches in Bengaluru and Madhya Pradesh on October 27 in investigations into alleged unauthorised cross-border remittances using cryptocurrency and stablecoins. Its findings concern Mudrex-related platforms and, separately, the Instadapp/Fluid decentralised-finance protocol.
The Bengaluru zonal office carried out the searches under Section 37 of the Foreign Exchange Management Act, 1999. The ED alleged that the arrangements bypassed Reserve Bank of India requirements for inward and outward remittances.
Mudrex-related findings
In the Mudrex investigation, the agency said complaints alleged large-scale FEMA violations by Bengaluru-based RPFAS Technologies Private Limited, which operates Mudrex and Saber.money. It alleged that crypto tokens, particularly USDT and USDC stablecoins, were used for cross-border payments outside authorised channels.
The ED said the platforms advertised on-ramp and off-ramp services: converting conventional money into virtual digital assets and converting those assets back into money. It alleged that users registered on the platforms, deposited funds in company bank accounts and that the funds were used to purchase stablecoins for transfers.
The agency alleged large over-the-counter deals and the use of shell entities in jurisdictions including Canada, Lithuania and the United States. It said crypto transactions through foreign platforms such as Binance and Bybit and foreign expenses paid in crypto violated FEMA. Its preliminary findings cited unauthorised cross-border transfers and foreign crypto balances amounting to more than ₹4,600 crore.
Instadapp and Fluid investigation
In the separate Instadapp investigation, the ED described the Ethereum-based decentralised-finance protocol, now operating largely under the Fluid name. Although Instadapp Labs LLC is registered in Delaware, the agency alleged that the protocol and associated activities were managed from India, including by founder Sowmay Jain.
The ED named entities in the British Virgin Islands, Singapore and Dubai that it alleged were used in the arrangements. These included Instadapp Labs Inc., Interop Labs Ltd and Summerspeak Ltd in the British Virgin Islands, Upsurge Labs Pte Ltd and Bhindi Labs Pte Ltd in Singapore, and Pebble Labs Technology Ltd in Dubai. It alleged that the entities lacked physical offices or employees at their registered locations.
According to the agency, protocol revenue and investor funds were raised as stablecoins in wallets of Interop Labs Ltd controlled from India. It alleged that stablecoins were sold through Independent Reserve Singapore and QCP Capital, with proceeds credited to Singapore accounts of Upsurge Labs and Bhindi Labs. Funds were then allegedly sent to India as payments for bogus software development and consultancy services; some money was also routed to founders’ bank accounts in Dubai.
The agency separately alleged the use of Singapore bank prepaid cards for expenses of India-based entities. It put the preliminary FEMA contraventions in the Instadapp investigation at approximately US$40 million. That figure is distinct from the Mudrex-related findings. Further investigation is under way.
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