Major Corporate and Startup Frauds in India Over the Last Decade
India’s dynamic corporate and startup ecosystem has not been immune to high-profile frauds, especially over the last ten years. These scandals have uncovered gaps in governance, flawed financial practices, and regulatory weaknesses, often leading to a loss of investor confidence and institutional trust.
Satyam Computers Scam (2009)
Satyam, once a top-tier IT firm, collapsed after its founder, B. Ramalinga Raju, admitted to manipulating financial records by over ₹12,318 crore.
- He used fake invoices and nonexistent debtors to inflate revenues over several years.
- Funds were secretly diverted into real estate ventures linked to the Raju family.
- The fraud shook global investor trust, especially in Indian IT governance practices.
- In its aftermath, Tech Mahindra acquired Satyam, which was renamed Mahindra Satyam.
- This case triggered regulatory reforms in corporate governance and audit scrutiny in India.
BharatPe Financial Fraud (2022)
Fintech giant BharatPe was hit by a corporate scandal involving its co-founder Ashneer Grover and alleged fund mismanagement.
- Internal probes exposed payment trails to ghost vendors and irregular hiring practices.
- The company sought legal damages worth ₹88.67 crore and dismissed implicated staff.
- It highlighted serious lapses in startup governance, especially in high-growth fintechs.
- Investor confidence dipped, prompting calls for more robust board oversight in startups.
BluSmart Financial Misconduct (2025)
In 2025, EV-based ride-hailing startup BluSmart was investigated for a ₹262 crore fraud involving misuse of funds by its promoters.
- SEBI’s interim order found money being used for luxury spending and personal gains.
- The promoters, also linked to Gensol Engineering, were named in the probe.
- As a result, BluSmart ceased operations in Delhi-NCR, Mumbai, and Bengaluru.
- This scandal highlighted how interconnected ownership structures can facilitate fraud.
Zomato’s FD-Fueled Profitability (Recent)
Zomato, while showcasing ₹39 crore in profit, came under scrutiny for its non-operational earnings.
- A deeper look revealed its core business loss of ₹213 crore was masked by ₹252 crore earned from fixed deposits.
- The term “FD-fueled profitability” was coined to describe such financial tactics.
- This case reflects a trend where startups tweak reporting to appear profitable pre-IPO.
- It underscores the need for transparency in financial disclosures to protect retail investors.
Other Notable Startup Frauds
Several lesser-known, yet impactful, frauds have emerged in the Indian startup space:
- OneCoin (2014): A global Ponzi scheme disguised as a crypto project that duped global investors, including many in India.
- Promoted fake blockchain technology and worthless digital tokens.
- Its founder, Ruja Ignatova, remains a fugitive on the FBI’s most wanted list.
- Mozido (2017): A fintech firm that raised $55 million and misused funds for lavish personal lifestyles.
- The SEC later charged its executives with fraud and the company shut down.
- It remains a cautionary tale of unchecked venture capital spending.
Key Industry Patterns and Consequences
These cases reveal a growing pattern of creative accounting, aggressive financial projections, and opaque governance among Indian firms.
- Startups often prioritize growth over transparency, resulting in risky investor environments.
- Retail investors, especially post-IPO, are often left with losses and disillusionment.
- The lack of stringent board-level controls and independent audits has amplified these risks.
- These incidents have led to calls for stricter SEBI oversight and mandatory financial disclosures for all high-growth startups.
The cumulative effect of these frauds has pushed the Indian ecosystem to reassess corporate responsibility, startup due diligence, and regulatory robustness.
⚠️ List of 25 Startups Involved in Frauds or Major Controversies in India
| # | Startup Name | Nature of Fraud / Controversy | Estimated Amount Involved | Year(s) |
|---|---|---|---|---|
| 1 | Byju’s | Financial irregularities, aggressive sales, FEMA violations | Over $500 million (approx. ₹4,000 crore) | 2023–2024 |
| 2 | GoMechanic | Accounting fraud, inflated revenue numbers | ₹108 crore | 2023 |
| 3 | Zilingo | Misreporting of finances, CEO ousted | Amount not specified | 2022 |
| 4 | Trell | Financial mismanagement, reported losses inflated | Losses of ₹59 crore | 2023 |
| 5 | Franklin Templeton (India arm) | Alleged mismanagement of debt funds | ₹27,508.14 crore | 2020 |
| 6 | BluSmart | Fund diversion from Gensol, ED investigation | ₹262 crore | 2025 |
| 7 | Mahadev Betting App | Illegal online gambling, money laundering | ₹6,000 crore | 2023 |
| 8 | Appin | Global hack-for-hire operation, espionage | Amount not specified | 2022 |
| 9 | Razorpay | Payment processing for shady loan apps, ED probe | ₹500 crore | 2022–2025 |
| 10 | BharatPe | Fraudulent invoices, Ashneer Grover’s alleged misuse of funds | ₹81 crore | 2022 |
| 11 | DHFL | ₹34,000 crore banking fraud | ₹34,000 crore | 2019 |
| 12 | Stayzilla | Vendor fraud allegations, founder arrested | Amount not specified | 2017–2019 |
| 13 | Housing.com | Governance issues, inflated user metrics | Amount not specified | 2019 |
| 14 | Dunzo | Financial instability, investor fallout | Losses over ₹1,800 crore | 2024–2025 |
| 15 | 123Greetings (Intrasoft) | Alleged insider trading | Amount not specified | 2021 |
| 16 | CloudWalker Streaming | ED raids for FEMA violations, fund misuse | Amount not specified | 2022 |
| 17 | Ola Electric | Alleged under-delivery on performance claims | Amount not specified | 2022–2023 |
| 18 | Paytm Payments Bank | Data-sharing violations, regulatory crackdown | Amount not specified | 2023–2024 |
| 19 | JetSetGo | Tax evasion allegations | Amount not specified | 2021 |
| 20 | Vauld (Crypto platform) | Insolvency, mismanagement of investor funds | Amount not specified | 2022 |
| 21 | CoinDCX | Allegations of irregularities in KYC compliance | Amount not specified | 2022 |
| 22 | Anarock | Alleged fudging of transaction data | Amount not specified | 2021 |
| 23 | Zoomcar | Multiple consumer fraud complaints, refund issues | Amount not specified | 2020–2023 |
| 24 | KredX | Accused of misleading investors, delay in payouts | Amount not specified | 2022 |
| 25 | Mobikwik | Data breach controversy, denial despite strong evidence | Amount not specified | 2021 |
India’s corporate and startup world has experienced seismic shocks due to financial misconduct over the past decade. From Satyam’s historic collapse to BluSmart’s modern mismanagement, the red flags are clear. To restore trust and stability, India must enforce rigorous regulatory norms, demand greater accountability, and empower investors with transparency tools. The path forward lies in balancing innovation with integrity, and growth with governance.
[1] https://indiansocietyforlegalresearch.in/2021/11/14/corporate-frauds-in-india-from-1992-2019/This article is based on verified reports and credible sources documented through 2025.
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[11] https://inc42.com/features/top-controversies-that-kept-indian-startups-on-the-edge-this-year/
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[17] https://en.wikipedia.org/wiki/List_of_scandals_in_India
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[19] https://economictimes.com/news/company/corporate-trends/59-companies-faced-financial-fraud-in-past-2-years-pwc-survey/articleshow/116448968.cms
[20] https://www.pwc.in/press-releases/2024/59-of-indian-organisations-faced-financial-or-economic-fraud-in-the-past-24-months-where-procurement-fraud-emerged-as-the-top-threat-pwc-survey.html
[21] https://ongrid.in/blogs/fraud-in-2025-the-10-biggest-threats-to-your-business-and-how-to-prevent-them/
[22] https://finshots.in/archive/indias-biggest-startup-scam-ever/
[23] https://digitaldefynd.com/IQ/biggest-business-scandals/
[24] https://yourstory.com/2024/12/understanding-payment-fraud-growing-threat-fintech-startups-india
[25] https://www.instagram.com/reel/DIiUx3IyfG6/
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[28] https://ssrana.in/ufaqs/financial-frauds-india-legal-action/
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[30] https://timesofindia.indiatimes.com/technology/tech-news/indian-american-ceo-and-president-of-this-tech-startup-charged-in-billion-dollar-fraud-that-defrauded-investors-goldman-and-google-what-court-documents-say/articleshow/111447133.cms
[31] https://en.wikipedia.org/wiki/Satyam_scandal
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[36] https://arnab.co/the-startup-competition-scam-how-fake-entrepreneurs-are-stealing-millions-from-competitions/
