India’s Enforcement Directorate (ED) has raided multiple premises in Bengaluru as part of an investigation into an alleged $35 million cryptocurrency over-the-counter (OTC) fraud targeting foreign investors.
The agency’s Bengaluru branch conducted searches from July 18 to 19 under the Prevention of Money Laundering Act (PMLA), following a complaint from a Dutch entity. Investigators seized electronic devices, wallet credentials and crypto assets worth about 8,700 USDT as they traced the alleged operation.
ED, Bengaluru has conducted search operations under PMLA, 2002 on 18.07.2026 and 19.07.2026 at multiple places, in the case of large scale scam in Over the Counter Trades (OTC) in Virtual Digital Assets to defrauding foreign investors by promising of discounted crypto tokens… pic.twitter.com/grTykuTINc
— ED (@dir_ed) July 21, 2026
According to the investigation, the group used private social media channels to approach overseas investors with offers to buy tokens including MultiversX, Kava, BEAM, GRASS, SUI, VANA and AGLD at discounted prices.
The alleged scheme relied on the appeal of early or preferential access. Investors were encouraged to send funds for token purchases, but the ED is investigating the transactions as part of a wider fraud operation rather than legitimate OTC sales.
The agency’s searches are aimed at identifying the people behind the operation and tracing the movement of funds and digital assets. The investigation remains ongoing, and the allegations have not been tested in court.
Why crypto OTC deals are attractive to fraudsters
OTC markets operate outside the order books of public exchanges and are commonly used for large transactions that may require privacy or reduce the market impact of a trade. That structure can make them useful for legitimate investors, but it can also make verification harder when a deal depends on personal relationships or private communications.
The alleged fraud shows how scammers can copy the language of legitimate crypto fundraising and private allocations. Promises of discounted tokens can sound credible because early investors sometimes do receive preferential prices, but the private nature of such deals can leave investors with fewer safeguards than they would have on a regulated trading venue.
The real risk of crypto OTC deals is the lack of transparency
Crypto OTC markets can offer faster and more flexible transactions, but they also create a trust gap when investors deal with unknown intermediaries outside established platforms. For foreign investors, that gap can be even wider because they may struggle to verify who controls the wallets, where funds are being moved, or whether a counterparty has a legitimate business.
The alleged fraud shows why transparency is becoming a bigger issue for the crypto industry. As more investors use private brokers and direct trading networks to move large sums, the line between legitimate OTC activity and fraudulent schemes can become difficult to identify. That makes proper due diligence, transaction records and clear counterparties increasingly important, especially when large cross-border crypto transactions are involved.
Meanwhile, Indian authorities arrested five individuals accused of orchestrating a cryptocurrency scam that defrauded a businessman of nearly $700,000 through a fraudulent trading platform.
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