Binance Turns Up in India’s $500 Million-Plus Crypto Probe as a Route for Foreign Payouts

India’s Enforcement Directorate (ED) has turned its investigative focus on more than ₹5,000 crore (≈ $527 million) in crypto transfers that it says crossed the country’s borders without permission. The agency’s latest raids, conducted on Oct 27 in three Bengaluru locations and one site in Madhya Pradesh, were part of a broader effort to enforce the Foreign Exchange Management Act (FEMA). While the ED highlighted “shell entities in tax‑haven countries,” “massive OTC deals,” and “illegal foreign payouts via platforms like Binance and Bytt,” it stopped short of filing charges, making arrests, or seizing assets.

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1. Scope of the probe and the agencies involved

The Enforcement Directorate is India’s chief regulator for foreign‑exchange and money‑laundering compliance. Its remit under FEMA treats violations as civil offences, punishable by fines rather than criminal penalties, whereas money‑laundering matters fall under a separate law. In this case, the ED’s focus was on the alleged breach of FEMA rules – specifically, the movement of crypto assets abroad without the requisite approvals.

2. Platforms under scrutiny – Binance and Bybit

The agency’s statement singled out Binance and Bybit as conduits for “foreign payouts.” Both exchanges operate globally and allow Indian users to trade and withdraw crypto to overseas wallets. The ED’s language suggests that users may have been moving funds out of India via these platforms, but the statement also notes that no formal allegation has been made against either exchange. Neither Binance nor Bybit issued a public comment at the time of reporting.

3. Companies and DeFi protocols also mentioned

The press release named several Indian entities that the ED believes were involved in the alleged violations:

• RPFAS Technologies Private Limited – operator of Mudrex and Saber.money – was said to have bought and sold crypto on foreign platforms, with the ED estimating FEMA contraventions at more than ₹4,600 crore.
• Instadapp (now operating as “Fluid”) – a DeFi protocol – was linked to an estimated $40 million in cross‑border transfer violations.

Both firms declined to comment, while a Mudrex representative maintained that its operations remain compliant and user funds are secure.

4. Context: Earlier raids and the broader regulatory climate

The Oct 27 raids follow a June 17 sweep by the same Bengaluru office, which targeted six premises tied to crypto payment and remittance firms, including Transak Technology India and Buyhatke Internet. That earlier operation resulted in the freezing of about ₹6 crore in bank accounts and was also framed as a FEMA enforcement action.

India’s regulatory stance on crypto has been increasingly stringent. The government’s 2023 prohibition on private cryptocurrencies, coupled with ongoing efforts to bring crypto‑related activities under the purview of existing financial laws, has led to heightened scrutiny of exchanges, DeFi platforms, and related service providers.

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Practical take‑aways

• For Indian crypto users: Be aware that cross‑border transfers via overseas exchanges may be viewed as FEMA violations. Maintaining thorough records and seeking professional advice can mitigate risk.
• For exchanges operating in India: Transparent compliance processes, clear user guidance on cross‑border transactions, and cooperation with regulators are essential to avoid being caught in future probes.
• For the broader market: The ED’s approach underscores a shift toward treating crypto as part of the traditional foreign‑exchange ecosystem, signalling that future enforcement actions will likely focus on the flow of funds rather than the technology itself.

The investigation remains ongoing, and the lack of formal charges means the situation could evolve. Stakeholders should monitor official ED communications for any updates that may affect compliance requirements or market dynamics in India’s rapidly changing crypto landscape.