ED searches Mudrex, Saber.money over alleged unauthorised cross-border crypto transfers

The Enforcement Directorate (ED) has conducted searches at four premises in Bengaluru and Madhya Pradesh in connection with an investigation into alleged violations of the Foreign Exchange Management Act (FEMA), 1999, involving cryptocurrency-based cross-border money transfers through platforms operating under the names Mudrex and Saber.money.

The ED's Bengaluru Zonal Office carried out the searches on October 27 under Section 37 of FEMA at three premises in Bengaluru and one in Madhya Pradesh, following allegations that the platforms facilitated unauthorised cross-border financial transactions using virtual digital assets (VDAs), particularly stablecoins, the agency said in a press release dated October 29.

The investigation was initiated following complaints alleging large-scale FEMA violations by Bengaluru-based RPFAS Technologies Private Limited, which operates the two platforms. According to the ED, preliminary enquiries and intelligence gathered during the investigation indicated that the entity was allegedly using crypto assets to facilitate international money transfers while bypassing authorised channels for cross-border remittances.

The agency said the entity was advertising services that enabled users to transfer money across borders using cryptocurrencies despite not being authorised by the Reserve Bank of India (RBI) to provide such remittance services.

How the alleged transfer mechanism worked

According to the ED, the alleged modus operandi involved users registering on the platforms and depositing money into the company's bank accounts. The funds would then be used to purchase VDAs, particularly stablecoins such as Tether's USDT or USD Coin (USDC).

The acquired digital assets would subsequently be sold on Indian cryptocurrency exchanges, with the proceeds remitted to the intended recipient, according to the agency's findings.

The ED said the process effectively allowed money to be converted from fiat currencies into digital assets and back into fiat currency to facilitate cross-border transfers.

The investigation is examining the use of on-ramp and off-ramp services, which enable users to move between conventional currencies and digital assets.

An on-ramp service allows users to convert traditional currencies such as the Indian rupee, US dollar or euro into cryptocurrencies or stablecoins. An off-ramp service allows users to sell digital assets and withdraw the proceeds into bank accounts.

While these services can facilitate legitimate cryptocurrency transactions, the ED's investigation centres on whether they were allegedly used to conduct cross-border remittances outside the authorised framework.

The agency said the platforms advertised their services as a way to convert fiat currency into crypto assets and back almost instantly, positioning the infrastructure as a faster alternative for international payments.

Stablecoins under regulatory scrutiny

The case brings the use of stablecoins into focus in the context of India's foreign exchange regulations.

Stablecoins are digital tokens designed to maintain a relatively stable value by being pegged to an underlying asset, commonly a fiat currency such as the US dollar. USDT and USDC are among the stablecoins used in cryptocurrency markets.

Their ability to facilitate transfers between digital wallets and cryptocurrency exchanges has made them relevant to cross-border payment infrastructure. However, the regulatory treatment of a transaction depends on its structure, purpose and compliance with applicable laws.

In the case under investigation, the ED alleges that stablecoins were used as an intermediary to transfer value across borders without following the authorised banking and remittance channels.

The agency's investigation is being conducted under FEMA, which governs foreign exchange transactions and cross-border payments in India. Section 37 of the Act empowers the ED to investigate suspected contraventions of its provisions.

The searches are part of the agency's efforts to examine whether cryptocurrency-based payment arrangements are being used to circumvent foreign exchange regulations.

Platforms marketed as cross-border payment infrastructure

The websites of Mudrex and Saber.money describe services centred on cryptocurrency access and cross-border payment infrastructure.

Saber.money's website presents its offering as a stablecoin-powered cross-border payments platform for Asia, with services covering remittances, payment service providers, global treasury and business-to-business transactions. Its promotional material highlights instant settlement and the conversion of fiat currency into stablecoins and back.

The platform also advertises on-ramp and off-ramp capabilities and describes its infrastructure as a means of enabling international payments through stablecoins.

The ED's press release cited such online advertisements while outlining the allegations against the entity.

The agency is examining whether the advertised services and the underlying transaction flows amounted to unauthorised cross-border money transfers under FEMA.

The investigation will be relevant to how crypto-enabled payment providers structure their operations, particularly where transactions involve the conversion of domestic funds into digital assets, transfers across jurisdictions and subsequent conversion into local currency.

Regulatory implications for crypto-enabled payments

The case highlights the distinction between offering cryptocurrency trading or conversion services and operating a payment arrangement that facilitates international remittances.

A platform may provide infrastructure for purchasing or selling virtual digital assets, but transactions involving the movement of money across national borders can raise additional regulatory questions under India's foreign exchange framework.

The ED's allegations concern the use of crypto assets to facilitate cross-border transfers while bypassing authorised channels. The agency's findings at the search stage do not, by themselves, establish a final determination of liability.

The investigation will need to establish the nature of the transactions, the flow of funds, the entities involved and whether the arrangements contravened FEMA.

The ED's October 29 statement did not provide a detailed breakdown of the transaction volumes allegedly routed through the two platforms, nor did it specify any arrests, seizures or freezing of assets in connection with the searches.

The agency said its investigation had been initiated on the basis of complaints alleging large-scale FEMA violations and that its enquiries had revealed the alleged circumvention of foreign exchange regulations through cryptocurrency-based cross-border payment arrangements.

The probe underscores the growing regulatory scrutiny of digital-asset infrastructure when it is used not merely for trading but also for transferring monetary value across jurisdictions.