The Enforcement Directorate (ED) has searched premises linked to CoinDCX and Delta Exchange India over alleged unauthorised cross-border crypto transactions. The searches took place across three locations in Bengaluru between November 4 and November 5.
The agency said the transactions involving crypto derivatives and tokenised foreign stocks ran into thousands of crores of rupees. It conducted the searches under the Foreign Exchange Management Act (FEMA), 1999.
The premises were linked to Neblio Technologies Pvt. Ltd., CoinDCX’s parent company, and Excelium Technologies Pvt. Ltd., which operates Delta Exchange India.
According to the ED, its investigation began after it received information about alleged foreign exchange violations by the two platforms.
The agency alleged that both exchanges facilitated spot trading, futures and options (F&O) trading, and tokenised shares of foreign companies through cryptocurrencies. It also claimed CoinDCX advertised these products without authorisation.
ED alleges CoinDCX routed transactions through overseas platforms
According to the ED, CoinDCX allegedly converted users’ rupee deposits into stablecoins, primarily USDT. It then allegedly transferred these funds to overseas crypto platforms, including Binance, KuCoin, Gate.io and Bybit.
The agency claimed these transfers bypassed foreign exchange regulations governing cross-border transactions.
For spot trading, the ED alleged CoinDCX used an account held by a Costa Rica-based entity to transfer USDT. It described the company as a paper entity and alleged that CoinDCX executed transactions directly through its application programming interfaces (APIs).
The agency made similar allegations concerning the platform’s F&O product. It claimed CoinDCX opened matching positions on overseas platforms through APIs after users placed orders.
According to the ED, settlements took place on foreign platforms when users closed their positions.
The agency also alleged that CoinDCX routed tokenised foreign stock trading through Hyperliquid. Users’ funds were reportedly converted into USDT to open positions, with settlements taking place overseas.
Furthermore, the ED alleged that CoinDCX paid hundreds of crores of rupees in transaction fees to foreign platforms through stablecoins. The agency said these transactions potentially contravened foreign exchange rules.
Delta Exchange India also faces ED scrutiny
The ED alleged that Delta Exchange India offered spot trading, crypto derivatives and tokenised foreign stocks through cryptocurrencies.
According to the agency, a significant volume of Delta Exchange India’s derivatives and tokenised-stock transactions was routed through CoinDCX. It alleged that CoinDCX subsequently executed these transactions on overseas platforms.
The ED also alleged that Delta Exchange India transferred hundreds of crores of rupees to overseas associate entities. These transactions remain under investigation.
The agency said the fintech products offered by both exchanges appeared to prima facie contravene provisions under several laws. These include the Securities Contracts (Regulation) Act, 1956, the SEBI Act, 1992 and the Reserve Bank of India Act, 1934.
Delta Exchange India confirms cooperation with ED
Delta Exchange India said it had fully cooperated with officials during the searches. The company also confirmed that it provided the information requested by the agency.
In a statement posted on X, the exchange said it remained committed to extending further assistance. It also denied involvement in cross-border transfers of virtual digital assets.
CoinDCX had not issued a statement on the searches at the time of the report.
ED expands investigation into crypto-related forex transactions
The searches form part of the ED’s wider investigation into alleged foreign exchange violations involving cryptocurrency platforms.
Earlier, the agency initiated a probe into alleged unauthorised cross-border transfers worth more than Rs 4,940 crore. The investigation involved crypto platforms Mudrex and Saber.money, along with decentralised finance protocol Instadapp and its associated platform, Fluid.
Additionally, in June, the ED searched six premises linked to five platforms. These included Transak, Carret, Xpat, Onramp.money and Onmeta.
The latest investigation will examine the alleged transaction routes and compliance with applicable foreign exchange regulations. The allegations against CoinDCX and Delta Exchange India remain under investigation.
