CID Cracks Down on Tiger Global-Backed ‘Jar’ Over Alleged Ponzi-Style Violations

• Editor
• February 27, 2026
• breaking news, Defence, economic, Government
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BENGALURU — In a move that has sent shockwaves through the Indian fintech ecosystem, the Karnataka Crime Investigation Department (CID) has officially launched an expansive probe into Jar Gold Retail Pvt. Ltd. The action, initiated by the Deposit Fraud Investigation Unit, targets the startup’s flagship digital gold savings model, alleging it operates as an unregulated deposit scheme.

The Flashpoint: Legal & Regulatory Crosshairs

The investigation stems from an FIR registered on January 16, 2026, which has now escalated into a full-scale CID inquiry. At the heart of the dispute is the Banning of Unregulated Deposit Schemes (BUDS) Act, 2019.

• The Allegation: Authorities allege that Jar is operating without the mandatory licenses from the Reserve Bank of India (RBI) or the Securities and Exchange Board of India (SEBI).
• RBI Intelligence: Sources indicate that the RBI’s Market Intelligence Unit flagged “dubious” refer-and-earn schemes and warned that the company’s promises to investors might not be fulfilled.
• The Seizure: CID officials have already frozen multiple bank accounts, seized electronic devices, and placed the startup’s registered office under lock and key.

Inside the Numbers: A Billion-Dollar Scale Under Scrutiny

Jar’s growth trajectory has been nothing short of meteoric, which is precisely why the regulatory hammer is falling so hard. The startup has successfully marketed itself to “first-time savers” in Tier 2 and Tier 3 cities.

The Startup’s Defense: “Physical Backing exists”

Jar’s leadership, including co-founder Nishchay AG, has moved the Karnataka High Court to quash the FIR. Their defense rests on three pillars:

1. Vertical Integration: Jar argues it isn’t just a middleman but owns a significant part of its gold stack, ensuring every digital gram is backed by physical bullion.
2. Reputable Custodians: The company maintains that all gold is stored in high-security vaults managed by Brink’s and insured by ICICI Lombard.
3. No Consumer Default: Counsel for Jar emphasized that “not a single customer” has filed a complaint regarding a failure to withdraw funds or physical gold.

“We remain confident that the facts will emerge through the due process of law. Every rupee collected is accounted for and backed by physical assets.” — Jar Company Spokesperson

Market Impact: A “Grey Zone” No More?

This case is a watershed moment for the digital gold industry. For years, platforms like Jar, Gullak, and others have operated in a regulatory vacuum—neither fully classified as a “security” by SEBI nor a “deposit” by the RBI.

• SEBI’s Stance: In November 2025, SEBI issued a stern advisory stating digital gold products are unregulated and lack the investor protection mechanisms found in Gold ETFs or Sovereign Gold Bonds (SGBs).
• The BUDS Act Precedent: If the High Court rules that digital gold qualifies as an “unregulated deposit,” it could effectively shut down the current business models of dozens of fintech apps across India.

What’s Next?

Justice M. Nagaprasanna of the Karnataka High Court has reserved the judgment as of late February 2026. While the court has directed the CID to avoid “unnecessary arrests” for now, the freeze on transactions remains a critical bottleneck for the company’s operations.