Heat of the ED: How Indian startups faced enforcement action in 2025

In 2025, the Enforcement Directorate (ED) took a more active enforcement role in India’s startup ecosystem, as scrutiny moved from sector-specific probes to operational intervention. What began with probes focused on online gaming extended during the year to fintech, e-commerce, and cross-border trading platforms.

At least eight startup-origin companies came under ED action. In several cases, the outcomes extended beyond notices and investigations to account freezes, court proceedings, operational disruption, and business shutdowns.

WinZO: Founders Arrested in PMLA gaming Probe

Online gaming startup WinZO faced extensive enforcement action. The ED initiated a PMLA probe citing user complaints and FIRs that alleged manipulation of outcomes, restrictions on withdrawals, and continued real-money gaming activity.

In submissions before the Karnataka High Court, the ED cited 298 complaints and five FIRs. Bank and escrow accounts were frozen, affecting operations. The founders were placed in judicial custody, and the company stated that routine business activities were disrupted.

Probo: Enforcement action and shutdown

Opinion trading platform Probo was among the most prominent cases. In July, the ED conducted searches at multiple locations and seized assets worth Rs 284 crore, alleging that Probo’s model amounted to illegal betting under the Prevention of Money Laundering Act (PMLA).

Probo challenged the FIR before the Punjab and Haryana High Court and sought relief on frozen bank accounts. With no interim relief granted and funds remaining inaccessible amid wider regulatory constraints on gaming, the company shut down operations.

Gameskraft (Pocket52): Account freezes

The ED also acted against Gameskraft, which operates platforms including Pocket52. In 2025, the agency froze deposits and escrow balances, citing concerns related to fund flows and refunds following regulatory restrictions.

Gameskraft has maintained that its offerings are games of skill and compliant with applicable laws. The matter remains under legal challenge.

Dream11: Searches linked to legacy transactions

Fantasy sports platform Dream11 came under ED scrutiny when searches were conducted across more than 25 locations, including premises linked to co-founder Bhavit Sheth.

The action formed part of a Rs 2,434 crore money-laundering investigation linked to Jai Corp and related entities. The ED is examining historical financial linkages involving Dream Sports. No direct operational allegations have been made against Dream11.

Myntra: FDI compliance case

Fashion e-commerce platform Myntra faced ED proceedings over alleged foreign direct investment (FDI) violations amounting to Rs 1,654 crore. The agency alleged misuse of the wholesale cash-and-carry structure through transactions involving group entity Vector E-Commerce.

The matter is pending before the ED’s adjudicating authority in Bengaluru.

Simpl: Fintech classification issue

Buy-now-pay-later startup Simpl received ED action related to alleged FDI violations of Rs 913 crore. The agency stated that foreign capital was raised under the automatic route by classifying the business as IT services, despite its products resembling regulated financial services.

Operations continue as the matter proceeds.

Paytm: FEMA notices

Fintech company Paytm, along with subsidiaries Little Internet and Nearbuy, received show-cause notices over alleged FEMA violations worth Rs 611 crore.

The notices relate to overseas investments made between 2015 and 2019, prior to Paytm’s acquisition of the entities. The company has stated that the issues predate its ownership.

OctaFX: Cross-border trading investigation

Global trading platform OctaFX was investigated under PMLA for alleged unauthorised operations in India. The ED has alleged investor losses of nearly Rs 1,875 crore between 2022 and 2023.

As part of the probe, the agency attached cryptocurrency assets and overseas properties linked to Pavel Prozorov, who was arrested in Spain. Chargesheets have been filed.

These cases indicate a broader shift in 2025 toward active enforcement affecting startup operations. For founders and investors, compliance related to FDI structures, escrow management, fund flows, and business classification has become a central operational consideration, alongside market and execution risks.