India’s startup ecosystem in 2025 was not just shaped by funding shifts and closures — it also saw a notable rise in regulatory enforcement, particularly by the Enforcement Directorate (ED) targeting alleged violations of anti-money-laundering and foreign investment laws. At least eight prominent startup-origin companies faced ED action this year, with outcomes ranging from notices and probes to account freezes, court cases and even shutdowns.

One of the most high-profile cases involved WinZO, an online gaming platform whose founders were arrested and whose bank and escrow accounts were frozen as part of a Prevention of Money Laundering Act (PMLA) investigation sparked by user complaints and multiple FIRs. The disruption significantly impacted routine operations. Another gaming-related entity, Probo, saw assets worth hundreds of crores seized by the ED, ultimately leading to its operational shutdown after the company struggled to regain access to frozen funds amid ongoing legal challenges.

Other startups felt enforcement pressure too. Gameskraft (Pocket52) had deposits and escrow balances frozen amid concerns about fund flows, while fantasy sports platform Dream11 underwent searches linked to historical financial links involving a larger money-laundering case. E-commerce player Myntra and fintech Simpl faced proceedings over alleged FDI violations, and Paytm received notices related to foreign exchange law compliance, which the company says relate to pre-acquisition periods. Even global broker OctaFX was investigated under PMLA for purported unauthorised operations and alleged investor losses.

These enforcement actions reflect a broader trend in 2025: startups must now balance growth ambitions with heightened regulatory compliance scrutiny, especially in areas such as FDI structures, fund flows, escrow management and business classification, adding a new dimension to operational risk in India’s tech ecosystem.