India's ED searches CoinDCX, Delta Exchange premises over alleged offshore trades
In brief
- ED searched three Bengaluru premises linked to CoinDCX and Delta Exchange on November 4 and 5.
- ED alleges CoinDCX routed user trades to Binance, Bybit and others using USDT.
- ED says trades ran through accounts of a Costa Rica-based entity it called a shell.
- CoinDCX and Delta Exchange say they cooperated fully and their services are operating normally.
What the ED alleges
The probe targets Neblio Technologies (which operates CoinDCX) and Excelium Technologies (which runs Delta Exchange), Decrypt reported. The agency said both platforms offered futures and options on crypto tokens and advertised trading in tokenized shares of foreign companies without authorization.
The core allegation is about where the trades actually went. When users deposited rupees and placed orders, the ED alleged, CoinDCX converted the funds into USDT and opened matching positions on foreign exchanges including Binance, KuCoin, Bybit and Gate.io, bypassing India's outbound remittance framework. The agency said those trades ran through accounts held by a Costa Rica-based group entity it described as a shell, and were executed directly from CoinDCX via APIs.
Tokenized stocks are the other piece. According to the ED, trades in tokenized shares of Apple, Google and Tesla were really derivatives positions opened on decentralized exchange Hyperliquid.
The agency alleged that cross-border transactions in each of these areas ran to hundreds of millions of dollars.
It also said CoinDCX held crypto assets in enterprise accounts on foreign exchanges and paid tens of millions of dollars in USDT fees to those platforms, which the ED said breached FEMA. On Delta Exchange, the agency said a large share of its derivatives trading was executed through CoinDCX, and that it transferred tens of millions of dollars to overseas group entities. The ED added that the firms' fintech products also appear to contravene India's securities and central banking laws.
What the exchanges say
CoinDCX said in a post on X on November 6 that ED officials came to its Bengaluru office on November 4 as part of a routine enquiry.
"Officials from the Enforcement Directorate visited our Bengaluru office as part of a routine enquiry on 4th November. We fully cooperated with the authorities and provided all necessary information and assistance."
The exchange said it operates "in strict compliance with all applicable Indian laws, including FEMA," and that it meets its KYC, anti-money laundering and reporting obligations as an FIU-registered entity. Trading, deposits and withdrawals are still fully operational, it added.
Delta Exchange said in its own November 6 post that it had cooperated fully and that its business "does not involve any cross-border transfer of VDAs in any form or manner." It said it runs a dedicated rupee-settled exchange for Indian users only, has been FIU-registered since 2023, and that its services are working normally.
Where it stands
Decrypt said the probe adds to a difficult stretch for CoinDCX, one of India's largest crypto exchanges. For now, these are the ED's allegations, and the agency says its investigation is ongoing.
Frequently asked questions
What is India's Enforcement Directorate alleging against CoinDCX?
The ED alleged CoinDCX converted users' rupee deposits into USDT and opened matching positions on foreign exchanges such as Binance, KuCoin, Bybit and Gate.io, bypassing India's outbound remittance framework. It said the trades ran through accounts of a Costa Rica-based group entity it described as a shell. The ED says its investigation is ongoing.
How have CoinDCX and Delta Exchange responded to the ED searches?
CoinDCX said ED officials visited its Bengaluru office on November 4 as part of a routine enquiry, that it fully cooperated, and that it complies with Indian law including FEMA. Delta Exchange said it cooperated fully and that its business does not involve any cross-border transfer of virtual digital assets. Both said their services are operating normally.
