Digital gold savings startup Jar searched by Karnataka CID over potential violations

Jar co-founders Misbah Ashraf (L) and Nishchay AG (R)

The premises of Jar, a digital gold savings startup, have been searched by the Deposit Fraud Investigation unit, which falls under Karnataka’s Crime Investigation Department (CID), over potential violations, people aware of the developments told Moneycontrol.

Why is the CID investigating Jar?

The state department is seeking clarity on the company’s gold storage practices, including the custodial arrangements and safeguards in place to protect customer holdings, per sources.

In Jar’s case, all its physical gold is stored in secure vaults operated by Brink’s, a global security and logistics firm that provides vaulting and transportation services for high-value assets. Furthermore, the physical gold deposits are insured by ICICI Lombard, a leading insurance company in India.

To be sure, the company’s day-to-day operations are not impacted by the ongoing search.

Jar confirmed the developments to Moneycontrol. "We are fully cooperating with the authorities and have provided all information requested. As the matter is currently subjudice, it would not be appropriate for us to comment on specific allegations or details at this stage. We remain confident that the facts will emerge through the due process of law," a company spokesperson said.

Separately, a senior official in the Criminal Investigation Department (CID) also confirmed the developments to Moneycontrol: “We have registered a case under the Banning of Unregulated Deposit Schemes (BUDS) Act, 2019, and the investigation is on," the official said.

What does Jar do? What is its business model?

Bengaluru-based Jar allows users to invest in and buy digital gold via micro transactions on its platform. Digital gold is a way to own and invest in real gold online without taking physical delivery.

When a customer buys digital gold, on a platform like Jar, they own a backed amount of pure gold, typically 24 karat (24K), that is stored securely in vaults.

At the time of redemption, users have the option to withdraw their savings as cash, take physical delivery of gold or buy jewellery in exchange, as per Jar’s website.

Jar competes with Paytm, PhonePe, Amazon Pay, Google Pay and Tanishq, among others, in the digital gold savings category.

Why is this development important now?

Jar is being searched by the CID at a time when the sale of digital gold is gaining popularity among customers which is leading to increased sales.

Transaction volumes and amounts have touched new highs each month despite markets regulator, the Securities and Exchange Board of India (SEBI), having cautioned against investing in Digital Gold products offered through various online platforms, stating that these products are not regulated under the securities market framework and may carry significant risks.

The warning however did not deter users.

In January this year, the sale of digital gold, through UPI, surged to a record high of Rs 3,926 crore across 219 million transactions. That was an increase of over 4X on a year-on-year (YoY) basis from January 2025 when the sale of digital gold amounted to Rs 762 crore across 51 million transactions, as per data available with the National Payments Corporation of India (NPCI).

The growing traction has also led to investors flocking to the space. Moneycontrol had exclusively reported Jar is currently negotiating a fresh funding round, of about $100 million (Rs 900 crore), with WestBridge and others. The round values the company at $550 million (Rs 4,900 crore), an increase from $300 million (Rs 2,700 crore) in 2022, as per Tracxn, a private markets data provider.