ED raids Mumbai sites linked to Varanium Cloud IPO fraud worth Rs 40 crore

The Enforcement Directorate raided multiple Mumbai locations linked to Varanium Cloud and its promoter Harshavardhan Sabale in a ₹40-crore money laundering case tied to its 2022 IPO.

The Directorate of Enforcement (ED) on Tuesday said it has conducted searches at multiple locations in Mumbai in connection with an alleged money laundering case involving Varanium Cloud Ltd, its promoter Harshavardhan Sabale, and several associated entities. The searches, carried out on October 29, 2025, were initiated under the Prevention of Money Laundering Act (PMLA), 2002, following credible inputs about large-scale manipulation of financial records, circular fund movements, and suspected laundering of proceeds of crime, according to an official statement.

 

What is the ED investigating in the Varanium Cloud case?

 

According to the ED, Varanium Cloud and its related entities raised around ₹40 crore through an initial public offering (IPO) in September 2022, claiming the funds would be used to establish edge data centres and digital learning hubs in smaller towns. The company had projected itself as a fast-growing technology firm in digital media, blockchain, and EdTech, invoking associations with prominent business groups and media outlets to attract investors.

 

However, investigators found that the promised projects were never implemented and that funds were allegedly diverted through false transactions and circular movements to inflate turnover and market valuation. Trading patterns later indicated artificial price escalation and large-scale offloading of shares, consistent with a “pump-and-dump” scheme designed to lure retail investors before dumping shares at inflated valuations.

 

What has the ED recovered during the Mumbai searches?

 

The ED said its searches led to the seizure of extensive evidence, including over 400 cheque books, more than 200 SIM cards, and around 100 dual-SIM mobile phones. Many were linked to mule bank accounts opened with forged KYC documents. These accounts, operated from Mumbai, were allegedly used for layering and routing funds through over 150 shell and dummy companies to conceal the origins of illicit proceeds.

 

Officials also seized laptops, hard drives, and other electronic devices containing incriminating material. “The findings expose a well-coordinated racket of ‘drawer companies’ operating from small offices, where fake identities, mule accounts, and proxy communication networks were systematically used to dupe investors and launder money,” said an official familiar with the probe.

 

What’s next in the investigation?

 

The agency has identified several other individuals and entities connected to the case who are now under scrutiny. Further investigation is underway to trace the ultimate beneficiaries and map the fund flow across shell networks, the ED said.

 

The raids form part of a broader crackdown by the Enforcement Directorate on IPO-related manipulation and financial misreporting in mid-tier listed companies.