Why digital gold start-up Jar is under police scanner
What's the story
The Karnataka CID has launched an investigation into Jar Gold Retail Private Limited, a digital gold savings start-up. The company is being probed under the Banning of Unregulated Deposit Schemes (BUDS) Act, 2019. The FIR against Jar was registered on January 16 at the Koramangala police station in Bengaluru. It accuses the firm of collecting money from the public through a digital gold savings scheme on its app.
Scheme details
How does Jar's platform work?
The FIR alleges that Jar encouraged users to deposit small amounts regularly through its app and build up gold holdings in digital form. The police suspect this method of collecting money from the public without regulatory approval could be an unregulated deposit scheme. Users were reportedly allowed to open e-accounts on the Jar app, deposit money which would then be converted into digital gold holdings shown in their accounts.
Referral scheme
Referral bonuses to incentivize users
The FIR also accuses Jar of incentivizing users to bring in new participants by offering referral bonuses of 30-40%. Investigators suspect that money was collected from multiple users through this system during late 2025 and that the business may have operated without approvals from relevant regulatory authorities. The complaint further alleges that the platform is not registered with SEBI or any other financial regulator.
Company stance
Jar's response to allegations
Jar has challenged the police probe in Karnataka High Court, arguing that it is not running a deposit scheme. In response to the allegations, the company has maintained that it does not run a deposit scheme but merely provides a platform for buying and selling gold through its mobile app. Jar also said that it respects the legal process and is cooperating with authorities in the ongoing investigation.
Business operations
Regulatory warnings about digital gold investments
According to Jar, users buy gold through the app as a commercial transaction, with their consent. The company says all gold sold through its platform is accounted for and stored in Brink's vaults. However, the police complaint refers to alerts issued by financial regulators about the digital gold sector. An RBI market surveillance alert issued on July 20, 2025 reportedly raised concerns about the legality of Jar's business model.
Business growth
Over ₹100 crore collected from customers
The FIR and court filings indicate that over three crore users have opened digital accounts on the Jar platform. The company has reportedly collected over ₹100 crore from customers through its digital gold transactions. Founded in 2021, Jar has grown rapidly and claims to have generated a turnover of around ₹4,000 crore over the past five years.