In 2025, India’s startup ecosystem faced one of its toughest regulatory years as the Enforcement Directorate (ED) stepped up scrutiny, moving beyond sector-specific probes to deep operational intervention. What began with action against online gaming platforms soon widened to fintech, e-commerce, and cross-border trading startups—sending a strong message on compliance, governance, and financial transparency.
At least eight prominent startup-origin companies came under ED action during the year. In several cases, enforcement went far beyond inquiries, leading to account freezes, arrests, court battles, operational paralysis, and even business shutdowns.
Gaming Startups Under the Scanner
Online gaming firm WinZO faced one of the harshest crackdowns. The ED initiated a probe under the Prevention of Money Laundering Act (PMLA), citing hundreds of user complaints and FIRs alleging outcome manipulation and withdrawal restrictions. Bank and escrow accounts were frozen, founders were placed in judicial custody, and routine operations were severely disrupted.
Another major casualty was Probo, an opinion trading platform. In July, the ED conducted searches and seized assets worth Rs 284 crore, alleging illegal betting activities. With frozen funds and no interim relief from the courts, Probo eventually shut down operations—marking one of the most high-profile startup closures of 2025.
Gameskraft, which operates Pocket52, also faced account freezes over alleged fund flow concerns. The company has maintained that its offerings are games of skill and remains engaged in legal proceedings.
Fantasy Sports and E-commerce Under Watch
Fantasy sports giant Dream11 came under ED scrutiny through searches linked to a broader money-laundering investigation involving legacy financial transactions. While no direct operational wrongdoing has been alleged, the action highlighted how historical linkages can trigger regulatory attention.
In e-commerce, Myntra faced ED proceedings over alleged FDI violations worth Rs 1,654 crore, linked to its wholesale business structure. The matter remains pending before the adjudicating authority.
Fintech Firms Face Classification and FEMA Issues
Buy-now-pay-later startup Simpl received ED action over alleged foreign investment violations after authorities questioned its classification as an IT services firm rather than a regulated financial entity.
Fintech major Paytm, along with subsidiaries Little Internet and Nearbuy, was served show-cause notices for alleged FEMA violations worth ₹611 crore, related to overseas investments made before Paytm acquired these entities.
Cross-Border Trading Comes Under Lens
Global trading platform OctaFX was investigated for alleged unauthorised operations and investor losses of nearly ₹1,875 crore. The ED attached crypto assets and overseas properties, filing chargesheets as part of the probe. The company, however, has strongly denied the allegations.
A Turning Point for Indian Startups
The enforcement actions of 2025 signal a clear shift: compliance is no longer a back-office function but a core business priority. For founders and investors alike, issues around FDI structures, escrow management, fund flows, and regulatory classification have become as critical as growth and innovation.
As India’s startup ecosystem matures, 2025 may be remembered as the year regulatory discipline reshaped entrepreneurial risk.
