In a significant regulatory move, the Securities and Exchange Board of India (SEBI) has launched a detailed investigation into several listed companies allegedly linked to the high-profile Mahadev Online Betting App case. This crackdown follows findings by the Enforcement Directorate (ED) that suggest a deeper web of financial misdeeds involving money laundering, stock manipulation, and violations of foreign investment norms.
SEBI Joins the Mahadev Probe: A Deeper Look at Market Misuse
According to individuals with direct insight into the matter, SEBI has already identified violations in at least one or two cases. These include suspicious trading activities, with foreign portfolio investment (FPI) routes being used to channel illicit betting proceeds into the Indian stock market.
“These are innovative methods… now the money is coming in from overseas, being routed through the FPI route,” a source familiar with the probe stated.
SEBI, known for maintaining strict oversight of capital markets, has now stepped in to investigate whether listed firms and their promoters manipulated stock prices using illegally laundered funds. If these allegations are confirmed, SEBI could initiate action under various provisions of securities laws. So far, the regulatory body has not officially commented on the ongoing probe.
The ED’s Findings: Betting Money Entering Stock Market Through FPIs
The case first came under national attention due to the ED’s large-scale investigation into the Mahadev Online Book, a digital betting platform that allegedly laundered massive sums of money offshore. According to ED’s reports, the promoters of the app used a maze of benami (proxy) bank accounts to funnel betting proceeds to foreign locations such as Dubai and Mauritius.
What’s alarming is that these illicit funds were then re-routed back into India via FPIs, and invested into the domestic equity market. This mechanism is now suspected to have been exploited to manipulate the prices of certain small and medium enterprises (SMEs).
During extensive search operations conducted in April, the ED uncovered that these proceeds were being used in preferential share issues, promoter share sales, and issuance of share warrants. These tactics allowed the accused to not only inflate stock prices artificially but also mislead retail investors and increase the valuations of their companies through deceptive means.
₹573 Crore in Securities Frozen, ₹3.29 Crore in Cash Seized
In what has become one of the largest ongoing crackdowns in recent financial history, the ED has so far:
- Conducted over 170 raids
- Seized or attached assets worth ₹3,002.47 crore
- Frozen securities and demat accounts worth over ₹573 crore
- Seized ₹3.29 crore in hard cash
- Arrested 13 individuals
- Named 74 entities across five prosecution complaints
This paints a stark picture of how the Indian financial system was allegedly exploited to launder proceeds from illegal betting operations and manipulate the stock market to benefit specific promoters and firms.
Collusion Between Promoters and Accused: A Disturbing Pattern
Perhaps the most damning revelation from the ED’s investigation is that some promoters of listed companies appear to have colluded with the accused operators behind the Mahadev betting racket. The promoters allegedly used tainted money to invest back into their own companies, creating an illusion of investor confidence and growth.
This tactic reportedly involved middlemen and agents, who helped in pumping these illegal funds into company stocks, thereby inflating the share prices and raising the firm’s valuation for market optics. SEBI is now closely reviewing this modus operandi of share price rigging and is expected to expand the probe if additional evidence comes to light.
What’s at Stake: Investor Trust and Market Integrity
This case raises serious concerns about the integrity of India’s stock markets and the oversight mechanisms for foreign investments, especially through the FPI route. While SEBI has always maintained a strict stance against manipulation and insider trading, this episode highlights the evolving nature of financial crime, where illegal profits from unregulated online platforms are being whitewashed through complex investment channels.
Market experts argue that SEBI’s swift intervention is crucial not only to penalize the culprits but also to restore investor confidence, particularly among small retail investors who are often the biggest victims of such manipulations.
Conclusion: The Crackdown Has Just Begun
With both SEBI and the ED working in tandem, the Mahadev betting case could turn into a landmark investigation that reshapes regulatory scrutiny in India. The trail of laundered money, fake investments, and inflated stock valuations reveals just how vulnerable the system can be when illicit networks exploit regulatory loopholes.
As SEBI deepens its probe into the financial irregularities and possible violations of the FPI framework, more companies and individuals may find themselves under the scanner. The message is clear: misuse of the capital markets will not be tolerated, and the regulatory net is closing in.