India’s Enforcement Directorate, its crime-fighting agency, plans to issue a show-cause notice to Byju’s, alleging that it violated the nation’s foreign exchange rules, a person familiar with the matter told TechCrunch.
The allegations, which ED plans to make public as early as Tuesday, will say that the Bengaluru-headquartered startup has violated rules under the Foreign Exchange Management Act (FEMA) worth $1.08 billion. Indian TV channel CNBC-TV18 first reported the development.
The impending show-cause notice follows the agency searching the premises of Byju’s and its founder Byju Raveendran in late April. At the time, the agency said it had found and seized “incriminating” documents and digital data at the firm’s premises.
Byju’s said at the time that it was confident that the Enforcement Directorate will find that the startup, once valued at $22 billion, is in compliance with all local laws. In a statement on Tuesday, a Byju’s spokesperson said the company hadn’t received a notice from the ED.
The ED’s allegation is the latest headache for the Bengaluru-headquartered startup, which has spent the last six months correcting several mistakes.
The startup, backed by Prosus, Peak XV, Sofina, BlackRock, UBS, and Chan Zuckerberg Initiative, missed its revenue target for the financial year ending in March last year, the startup disclosed in a much-delayed accounts this month.
Byju’s CFO Ajay Goel left the startup to return to Vedanta late last month, following high-profile and abrupt departures of auditor Deloitte and three of Byju’s key board members in June. Prosus, which owns more than 9% of Byju’s and is one of its earlier backers, publicly slammed the Bengaluru-headquartered startup in July for not evolving sufficiently and disregarding the investor’s advice and recommendations despite repeated attempts.