India's ED Raids Mudrex and Instadapp Over Alleged $600M Forex Violations

India's Enforcement Directorate (ED) has conducted searches at premises associated with cryptocurrency platforms Mudrex and Instadapp over alleged foreign exchange violations totaling roughly Rs 5,000 crore ($600 million) ¹. The financial crime agency carried out searches across three locations in Bengaluru and Madhya Pradesh, targeting Bengaluru-based RPFAS Technologies—the operator of Mudrex and Saber.money—and the founders of Instadapp ¹.

According to an agency spokesperson, Mudrex allegedly violated the Foreign Exchange Management Act (FEMA) through unauthorized cross-border transactions and overseas balances exceeding Rs 4,600 crore ¹. Investigators alleged that Mudrex collected user funds via domestic bank accounts, purchased stablecoins including $USDT, and converted them back through local exchanges to facilitate inward and outward remittances without adhering to Reserve Bank of India (RBI) mandates ¹. The ED further claimed RPFAS Technologies set up shell entities across Canada, Lithuania, and the United States to bypass currency controls ¹. In response, Mudrex stated it fully cooperated with the probe, remains registered as a reporting entity with the Financial Intelligence Unit of India (FIU-IND), and maintains that user funds remain secure under standard operations ¹.

Instadapp Faces Allegations Over Offshore Network

Concurrently, the ED accused Instadapp—now operating as Fluid—of unauthorized foreign exchange dealings valued at approximately $40 million (Rs 381 crore) ¹. The agency alleged that although Instadapp claims to be operated by a US-based Delaware entity, its core operations and development are managed directly from India by co-founder Sowmay Jain ¹. The agency cited open-source data indicating the decentralized lending protocol holds more than $1 billion in crypto assets and has accumulated roughly $149 million in aggregate fees ¹.

Investigators alleged that the protocol's promoters routed operational revenues and investor funds through a web of shell entities spanning the British Virgin Islands, Singapore, and the United Arab Emirates ¹. The agency claimed stablecoin revenues parked in offshore wallets were liquidated on Singaporean crypto exchanges, before being sent back to India disguised as software development consultancy fees or diverted to personal bank accounts in Dubai ¹. Instadapp had not submitted a public response by Friday evening following the ED's assertions ¹. Because FEMA infractions are civil in nature, any confirmed violations remain compoundable with the RBI subject to regulatory determination and monetary penalties ¹.